Q: I like to make plans for my savings and would like to know whether the contribution limits will be increasing for the Thrift Savings Plan and the TSP Catch-up contribution plan for 2011 and 2012. A: The limits are indexed to inflation, and we won’t know whether they’ll be increasing until the inflation figures are in.
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Q: I plan to take the Voluntary Early Retirement Authority/Voluntary Separation Incentive Payments at my organization. Because I will be 50 years old when I retire, I am entitled to the entire balance in my Thrift Savings Plan account; since I am retiring, does the penalty still apply? A: There is nothing in your question that will exempt you from the early withdrawal penalty.
Q: I have accumulated nontaxable (according to the Office of Personnel Management) retirement deductions that will be refunded to me shortly. I would like to roll this entire refund into a Roth Individual Retirement Account, but the “rollover information” letter they sent me is unclear. It states that I am permitted to roll over certain benefits into an IRA, but there is no mention of a Roth IRA. It also says that I can roll over the nontaxable amount into an IRA, but that I need to track the taxable and nontaxable ammounts. Because the entire amount is nontaxable, can…
Q: I am close to retirement in the Civil Service Retirement System and will transfer my Thrift Savings Plan investments from the C and S Funds to the G Fund to be safe. My question is in the transfer of funds: Is it the amount of shares that is transferred from one fund to another, or is the value of the fund used to purchase shares in another fund? For example: the S Fund with 2,000 shares at $19 a share is worth $38,000. The G Fund is worth $13.50 a share. Will the 2,000 shares transferred to the G…
Q: I plan on taking a deferred retirement at age 54 with 32 years of federal service in May 2012. I have been in the Federal Employees Health Benefits program since 1985. My wife plans taking a job in the federal government prior to me taking the deferred retirement. When she is hired, the plan is for me to transfer to her FEHB. When I reach age 56 in May 2014, how will the deferred retirement impact the three parts of the Federal Employees Retirement System (basic retirement with high-3, etc.; supplement, which should be 32/40 x what I receive…
Q: I am a 44-year-old Federal Employees Retirement System employee. I have a financial planner who wants to explore withdrawing part of my Thrift Savings Plan and rolling it into a Roth individual retirement account to take advantage of the two-year payout of taxes. I told the financial planner we only have two options for TSP withdrawals: One is for hardship, and the other applies if you are more than 59 1/2 years old. Because I do not meet either requirement, it appears to me that I cannot make an in-service withdrawal. Are there other options for in-service withdrawals? The…
Q: During the Obama campaign, there was talk of allowing up to $10,000 penalty-free 401(k)/Thrift Savings Plan withdrawals for hardship purposes. Have you heard whether this has been passed into law yet? A: It is my understanding that penalty-free hardship withdrawals are permitted under certain circumstances. You should start with IRS Publication 590 or consult a qualified tax adviser for details. I recommend using someone who would be responsible for preparing your return for the year of the withdrawal.
Q: Regarding the Jan. 26 posting on “Forced into choosing TSP withdrawal options,” your final comment states: “An alternative would be to roll over your TSP to a low-cost IRA and then withdraw money as you please.” How is that possible if he is already 70 1/2. I’ve understood that an IRA is not available to purchase if you are already 70 1/2. A: You may roll your TSP balance to an IRA at any age.
Q: I am 70 and intend to retire Dec. 31 with FERS civil service since July 2001. Can I keep the TSP funds in an account and continue to earn whatever the fund may provide while also making minimum withdrawals to satisfy IRS withdrawal rules (whatever they may be). A: Yes, you may.
Q: My divorce Judgment and Decree of 2004 awarded me porrata share of FERS employee annuity, Thrift Savings Plan and Former Spouse Survivor Annuity. I remarried before age 55. My former spouse and I were married 21 3/4 years. Will I be eligible for any of these benefits? A: You should consult an attorney for the answer.