Volatile markets take their toll on many investors’ nerves, including those who are relying on their Thrift Savings Plan accounts to provide them with needed retirement income. When prices fall rapidly, as they have recently, many investors react with fear. The more prices fall, the more fearful investors become. Eventually, if prices fall enough, fear turns to panic. Somewhere along the way, many investors — usually those who have lost the most — give in to their fear and abandon their risky investments. This is an irrational response to falling prices and often does more harm than good in the…
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Q. Can I cash in U.S. Savings Bonds and use the money to add to my TSP annuity through Met Life? A. No
Q. When I use the TSP annuity calculator and plug in my numbers, I get a monthly dollar amount. Is this the actual amount I will receive every month or will there be processing/management fees from Met Life taken from the shown amount? If there are additional processing/management fees, how can I find out what my real monthly amount will be prior to making my decision on purchasing annuity vs. monthly payments? A. That is the amount you should expect to receive, before taxes, each month.
As a fiduciary responsible for managing and delivering retirement plans for my clients, most of whom are or were federal employees, I am concerned about possible changes to Civil Service Retirement System and Federal Employees Retirement System formulas that are being considered as ways to reduce government spending. I urge lawmakers to be careful in their deliberations on this issue and to avoid allowing special interests and other secondary considerations to affect their decisions. It is sometimes easy to focus on the big picture while losing sight of individuals. Assuming that an effect is small for the average employee or…
Q. If I have an outstanding TSP loan balance at the time of retirement in December and it is declared a taxable distribution, will that unpaid loan preclude me from taking a one-time partial withdrawal from my TSP account the next year? A. No.
Q. I will be 54 this year, a FERS employees with a minimum retirement age of 56. I am taking early retirement and leaving the end of July with 32 years of service. What can I do to avoid the 10 percent TSP early withdrawal penalty if I want to start withdrawing this year or early next year? A. If you’re not fully disabled or have huge medical expenses, you’ll need to either take a series of Substantially Equal Periodic Payments as allowed under IRS code section 72t or use your funds to purchase a life annuity. You should consult…
Q. What is the best location to place your funds in TSP during this debt ceiling fiasco? A. In a diversified allocation that support your retirement goals with a minimum of risk.
Q. I will be 55 in August and plan to retire in January after 22 years’ law enforcement service, two years’ military service, plus three years’ other government service, approximately 27 years’ total government service. All my debt will be paid in November. I would like to take a partial withdrawal from my TSP, $40,000 of the $120,000 currently in my TSP account. If I understand what I’ve been reading correctly I will not be subject to the 10 percent withdrawal penalty correct? Am I required to repay the $40,000 that I withdraw and will I have to claim it…
Q. I retired under CSRS with $29,000 in G Fund. What is a wise strategy to roll it over for future education for a 7-year-old? A.I don’t know why you’d roll it over. Why not just keep it in the TSP until you need it?
Q: If I retire at the age of 50 (21.25 years of service), I have a question concerning TSP. If I choose the life expectancy withdrawal at that time, from what I gather it is penalty free. In the year I turn 55, can I switch to the monthly payment withdrawal, and would that too be penalty-free? A: You’re talking about avoiding the early withdrawal penalty by using a series of Substantially Equal Periodic Payments (SEPP), which must continue for five years, or until you reach age 59 1/2, whichever is longer. You will find a SEPP calculator and additional…