Q. If I am contributing to a traditional Thrift Savings Plan, can I now change my future contributions to a Roth TSP, or do I have to wait until open season? A. You may start, stop or change your TSP contributions at any time.
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Q. My mother’s plan was purchased by MetLife. She wants to make a withdrawal but is told she can’t, or she needs a higher monthly payment. It’s only $300 due to a paperwork mistake, but she was told she could only submit this one time this year. Is there anything to do? A. If she bought an annuity, her monthly payments from that annuity are fixed for life. If she has a balance left in her Thrift Savings Plan account, she has the option of terminating her monthly payments with a final, lump-sum distribution of the remaining balance in her…
Q. What is the percentage of return if I invest the balance of my Thrift Savings Plan account in the annuity provided by TSP? A. The monthly payment depends upon your circumstances and the interest rate environment when you purchase the annuity. You can run a quote at www.tsp.gov. The return on investment from a TSP annuity can’t be known in advance, however. You’ll have to wait until the payments stop to figure it out. To illustrate, what if you buy a single life annuity with no refund and then die right away? Your return on investment will be hugely…
Q. I know that after reaching age of 70½, I have to withdraw a minimum requirement from my Thrift Savings Plan account. Will I be able to keep the rest of my TSP money in that account? A. Yes.
Q. I will be retiring at age 52 with 27 years as a law enforcement officer. If I do a partial withdrawal of the Thrift Savings Plan for down payment on a house, I know I pay taxes. I also would pay a penalty as I would be taking the partial withdrawal before age 55. Is the penalty 10 percent or 20 percent? Is the penalty directed at the entire amount withdrawn or toward the amount after taxes? A. The penalty is 10% of the gross amount.
Q. At age 59½, I would like to take an in-service withdrawal in June of about $100,000 from my Thrift Savings Plan. I plan to retire in December at age 60. Once I take the one-time, in-service withdrawal, can the rest be set up on monthly payments after I retire in December? A. Yes. Monthly payments are a form of full withdrawal.
Q. I recently decided to shift the corporate bond portion of my overall portfolio into my retirement accounts (i.e., shift my retirement account holdings largely into corporate bonds, and shift my taxable account holdings away from them) since the income from bonds is taxed at a higher rate than income from equities. Since the Thrift Savings Plan is about one-third of my retirement account money, I took a closer look at the F Fund and I was shocked to see that the majority of the Barclays Capital U.S. Aggregate Bond Index that the F Fund tracks is treasuries. I think…
Q. Does the Thrift Savings Plan allow one to shift all of his C Fund balance to the F Fund to wait out an expected downturn in the S&P 500? I know one generally should not try to guess the market, but if one could stay ahead of downturns and upturns (in theory), would it be more profitable over the long term (10 to 20 years) to shift out of C to F temporarily rather than suffering through market downturns (as in 2001-02 and 2008)? I guess it’s like selling high and buying back in low, assuming one’s timing was…
Q. I’m 33 years old and have been in the federal government since 2004. I own a house and max out my Thrift Savings Plan every year into the L2040 fund. Can I be more aggressive with my allocations? I won’t be able to retire until at least 2034. A. You can be more aggressive, but I can’t tell you if you should without the benefit of more information and some solid planning and analysis. The allocation you use should depend entirely on your unique resources, goals and circumstances.
Q. If, during the course of my federal career, my income (filed either individually or jointly with my spouse) exceeds the maximum allowed under the Roth IRA rules, do I have to convert my Roth to a traditional IRA? Can you maintain an existing Roth regardless of your income? A. This limit only applies to new money contributions. It does not affect your ability to maintain an existing account.