Q: I have checked your Q&A and have asked several people about the special retirement supplement (SRS) and can`t seem to get an answer. I’m a 56-year-old Postal Service employee with 22 years of service. Rumor has it there will be another VERA (early out). My two questions are, if I go out on VERA will I be able to take money out of my Thrift Savings Plan account without early withdrawal penalties even though I`m not 59 1/2 years old? I know I will be eligible for SRS. Will the fact that I will be getting SRS, an annuity…
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Q: Many financial advisers recommend a retiree include Treasury Inflation Protected Securities (TIPS) as part of the fixed-income portion of their portfolio to protect against rising inflation. Although TIPS are clearly different securities than those in the Thrift Savings Plan’s G Fund, it appears there are some similarities in both their composition and their returns over time. As TIPS aren’t available in the TSP (nor should they be, in my opinion), what are the pros and cons of using the G Fund as a substitute for a TIPS (IRA) fund in the fixed-income portion of a federal retiree’s portfolio? A:…
Q: I am 69 and plan to continue working well into my 70s. Do I have to start my Thrift Savings Plan withdrawals at age 70 1/2 or can I wait until I retire? What are my options? A: You can wait until you retire to begin your withdrawals.
Q: I enlisted in the Marine Corps and signed up for the Thrift Savings Plan in 2004. I was severely injured in Iraq in 2005 and was retired from active service in 2006. I am now receiving Combat Related Special Compensation, Social Security and my compensation from the Veterans Administration. Can I continue to add to my TSP account as a military retiree? I’m only 23 years old and would love to add to it. A: You may only contribute to the TSP through federal payroll deduction or via transfer from an eligible outside retirement plan.
Q: I have a question regarding borrowing against my Thrift Savings Plan and would like your opinion on the scenario as to whether it would be worth it. I am 52 years old and have eight years as a Federal Employees Retirement System employee, and I intend to do 12 more years for a total of 20 years before I retire. Currently, I contribute approximately $600 each pay period into my TSP account, which currently totals about $100,000. I have about $20,000 in loans. Would it be sensible to borrow $20,000 against my TSP to pay off the loans? Or…
Q: A co-worker is trying to convince me that taking an annuity without survivor benefit is more cost-effective than with the survivor benefit. He says it is better to take the full benefit and buy an insurance policy to protect my wife when I die. Besides the health insurance aspect of that decision, I argue that the survivor benefit is the better choice. I believe you wrote an article on why it is better to take the survivor annuity. Would you please repeat that advice and would you also point to where I may find more information on this question?…
The Thrift Savings Plan’s G Fund is in a class by itself. It is a government securities investment fund that guarantees against loss of principal while offering the returns of more risky, longer-term Treasury bonds. While the G Fund’s returns are similar to the yield provided by 10-year Treasury bonds, the G Fund is not comparable to a bond investment. Bonds and bond funds, like TSP’s F Fund, can and sometimes do lose money. Treasury bonds, for example, guarantee their interest payments and the value of the bond, if redeemed, at maturity. Along the way to maturity, however, the bonds…
Q: I am currently in a Civil Service Retirement System 6C designated law enforcement officer position. Aside from my CSRS retirement benefits, of which I will reach the maximum annuity of 80 percent at the end of this year, I have also contributed to the Thrift Savings Plan. I am not planning on relying on my TSP funds to supplement my retirement. I know there are ways to avoid the 10 percent tax penalty for early withdrawals before turning 55 years old (taking the money in a monthly annuity, etc.). I would like to take all of my TSP out…
Q: Can I transfer funds outside federal Thrift Savings Plan system? I would like to invest in some stocks in private sector. I am still working under the old federal retirement system; I will be 63 in June and have 35 years of service. Are there any penalties? A: You may take one age-based in-service withdrawal and roll it over to any Individual Retirement Account, without penalty. Use Form TSP-75, which, along with detailed instructions, is available at www.tsp.gov.
Q: Your response to an earlier question on Voluntary Early Retirement Authority/Voluntary Separation Incentive Payments puzzles me. If a federal employee is eligible for a retirement annuity under the Federal Employees Retirement System despite the fact they are taking an VERA/VSIP, why would there be a penalty for “early” withdrawal of TSP? A: I think that I clearly stated a fact (“There is nothing in your question that will exempt you from the early withdrawal penalty.”) that answers your question.