Q: Can a new federal employee roll over a pre-tax 401(k) from a private-sector job into the Thrift Savings Plan? A: Yes.
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Q: I am just about to retire from the FBI, where I’ve worked for 30 years. My parents left me a stock portfolio which dates back several decades. I would like, after retiring, to find and purchase a home using the stock portfolio, which is held in a trust my parents set up for me. I have never purchased a house, and I am wondering if there is any way to get around the capital gains taxes that probably would eat up huge chunks of the value of the stock portfolio once I liquidate most of the stocks to purchase…
Q: I worked for the federal government for about 12 years. When I left, I used some of my Thrift Savings Plan money as a down payment on my current home. That turned out to be a good move, since I bought when the market was down and my home’s value has gone up. However, with the recent downturn in the market, my parents have lost a tremendous amount of money and are in financial need. I would like to give them the remaining money in my TSP account (about $10,000). Is there any way to roll over my TSP…
Q: The TSP website states that there is not a 10 percent penalty for early withdrawal if the withdrawal is made in a year that you have deductible medical expenses over 7.5 percent of your total income. If I made a withdrawal of $20,000 and my total income was $32,000, would there be no penalty at all? Seven and a half percent of $32,000 is $2,400. If my medical expenses were $4,400, would there not be a penalty, or would I have to pay a penalty on $18,000 {4,400-2,400 = 2,000} A: As I understand the rules, the early withdrawal…
Q: I am planning to retire at MRA +10. I will be 56 1/2 years old. Will I be allowed to draw month distributions from my TSP account without penalty? If so, does this include no early withdrawal penalty from the IRS? A: Under the current rules, you will be allowed access to your TSP account without penalty after you retire.
Q: I am about five years from retirement under CSRS. I would like to take out a TSP loan to purchase a used car and to pay off a high-interest credit card balance. It seems to make sense to me since the interest rate is at 3.25 percent (G-fund). By being able to set the terms of the loan, I plan to have it paid off well before retiring. Does this make sense? What is the downside for my TSP account as I head toward retirement. A: You’ve explained your plan. I can’t tell you whether it’s the best option…
Q: I turn 49 in October. When can I start making catch-up payments to my TSP? Can I start the day after I turn 49, do I have to wait until Jan. 1, 2011 (since I turn 50 in 2011) or do I have to wait until I turn 50 in October of 2011? A: You can start them on or after January 1, 2011.
Q: I’m a FERS federal employee with almost 20 years of service. I’m 55 yrs of age and married. I’d like to retire in about seven years. At this stage, can you recommend a TSP allocation? A: The appropriate allocation will depend on your objectives and circumstances at the time, and can change through time. I can’t responsibly provide this kind of personal advice without the proper information and analysis.
Watching the news about the Gulf of Mexico oil spill, I am struck by the similarities between drilling for oil and trying to extract wealth from an investment portfolio. After wondering — and worrying — about the impact of the spill on life and livelihood, my question was: How could this well have been drilled without a reliable plan to stop the flow of oil in the event of a problem?” I realized that most investors — Thrift Savings Plan investors included — make the same mistake with their portfolios every day: They take risks that they don’t understand, or…
Q: My birthday is Dec. 27. I will be 60 this year. How do I calculate when I am exactly 59 1/2 years old? A: Adding 6 months to your birthday will work. You’ll be 59 1/2 on June 27, 2010.