Q. I was speaking with a Thrift Savings Plan representative recently and they said that not all of my years working with the federal government were vested. I started my career with the Federal Deposit Insurance Corporation (FDIC), then went to DoD, and now I’m with the Department of Veterans Affairs. I have 25 years served all together with just one break in service of two years. Do I need to speak with each agency to see if I’m vested? A. From the TSP Bulletin 15-1: Thrift Savings Plan Vesting Requirements and the TSP Service Computation Date: The TSP Vesting…
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Q. I have often read you stating to put your TSP in the L Fund most closely matching your expected life expectancy if you are not able to analyze the market (which I am not able nor willing to hire someone to do that). I am a former FERS employee, retired at age 56. I am now 59 and I only have $120,000 in my TSP and hope to wait until age 70 (or just leave it alone for my sons), if possible. I wondered if the L Fund most matching your life expectancy is suggested for a current employee…
Q. I am wondering how Lifecycle Funds value are determined. For instance, the L2050 Fund is less expensive than the L2020 Fund and the L2050 is the more aggressive fund meaning it has a higher percentage of C, I and S. I don’t understand how this works. Additionally, I tabulated each of the L funds by taking the percent allocation multiplied by the cost of the fund and it is less expensive for me to allocate the same percentages of any of the L funds (outside of L2050) directly versus the subsequent L fund. For example, as of this [April…
Q. I work for the U.S. Postal Service and would like to resign at 58 with 24 years of service. I will postpone my annuity date till I am 60 years of age, but I need to tap into my Thrift Savings Plan to tide me over for the two years I am waiting for my pension. Will I face the 10 percent penalty since I am not 59 1/2? I am retiring, but delaying the pension to avoid the 5 percent per year under 62. Would I need to use the lifetime average or could I set the amount I want to…
Q. I’m a FERS employee. As I reach retirement and knowing about my retirement and Social Security, what is the best way to maximize my TSP? If I have $1 million in my TSP, would moving the money from the C Fund to the G Fund and implement the 4 percent rule without wavering on my withdrawals would I run out of money? If the G Fund pays 1-2 percent every year I still seem to leave this Earth with money remaining. Looking at 4 percent calculation models, if you’re making an average above the 4 percent you wind up…
Q. I will be 72 in November and will continue working for the government for another two years. Can I change my TSP contributions to a Roth IRA now and be able to withdrawn the money from the account without penalty when I retire in June 2021? A. A penalty will be assessed against any Roth TSP earnings that are withdrawn before age 59 ½ or less than 5 years after Jan. 1 of the year in which you made your first Roth TSP contribution, whichever is later.
Q. I am a FERS employee age 47 with 27 years of service. I am currently on FMLA and will be resigning and applying for medical disability retirement. I know I can withdraw from my TSP but am not clear on the annuity option tax penalty. I want to withdraw funds to sustain me while waiting for a decision on my disability retirement. A. If you receive a TSP distribution before you reach age 59 ½, in addition to the regular income tax, you may have to pay an early withdrawal penalty tax equal to 10 percent of any taxable…
Q. Here’s a hypothetical: Say I separate from government service and withdraw all of my Thrift Savings Plan. Later I come back to government service. How would this situation be addressed? A. You will be starting fresh with a new TSP account.
Q. I’m a retired worker over 70 1/2. Are required minimum withdrawals required for the Roth TSP portion after the new rules go into effect or only for the Traditional amount of the TSP? If only for the traditional part, then the payment can come from either the Traditional or Roth part or both?
Q. I’m planning to retire on a December 31, which in the year I’m planning to retire will be in the middle of a pay period. I have a set amount taken out of TSP every paycheck. If I leave in the middle of a pay period, will I still have a withhold and will it be matched?