Browsing: Uncategorized

Pay off back taxes from TSP?

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Q. My husband and I owe back taxes to the IRS, and I would like to know if the IRS can deduct what we owe from my TSP. I have a residential and personal loan out through TSP, so I am unable to do that. We owe around $24,000 and would like it deduct from what is in my TSP. They keep telling me they can’t, but I am not sure of that. I would like to get this paid off so in around 7 years I can retire without owing them. If I was able to get them paid…

Annuity for the TSP

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Q. Why was MetLife chosen as the entity to provide an annuity for the TSP? Are there provisions or protections for federal employees that were negotiated? I asked that question of the TSP and they stated that there was no one within TSP or MetLife that I could talk to. Finally, most forums seem to discourage annuities — they suggest that we stay in the TSP and take monthly allotments. Comment? A. The FRTIB chose MetLife, so they would be the ones to explain why. I don’t know of any special protections built into the deal. Once you buy the annuity, it’s…

Voluntary contribution options

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Q. I’ve been getting mixed advice regarding my voluntary contributions options. I was planning to ask OPM to send the (post tax) VC contributions to a new Roth IRA so I can more easily track the five-year holding requirement, and send what minimal interest accrued during the brief time the account will have been open to my TSP (if OPM will transfer such a small amount) or simply let them withhold 20 percent and send me the accrued interest. However, I also have a small basis in an old traditional IRA because of a recharacterization several years ago, and now…

TSP rollover

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Q. I am FERS-covered and plan to retire in August at age 62. I am now front-loading my TSP contributions to the maximum (including the $5,500 catch-up which I have already contributed). At retirement, I plan to roll over all my TSP balance to an outside IRA account. Questions: 1) Will I be able to roll over the: a) Traditional TSP portion to a traditional IRA account? b) TSP Roth portion (which I started in 2013) to an outside established Roth IRA account? 2) Shall I now contribute the remainder (about $12,000 of $17,500) to the TSP Roth so that…

Buy annuity with TSP money?

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Q. I retired (at age 72) from the Department of Labor on Jan. 31. I have $368,000 in my Thrift Savings Plan invested — 40 percent G fund; 20 percent C fund; 20 percent I Fund; and 20 percent S Fund. The combined interest yield for 2013 was $85,000 (a 12 percent gain). I was thinking about drawing out $5,000 a month for 10 years and depleting the fund. If I take a monthly deductions, I computed the interest earned for a 10-year period at 10 percent. This will expand the fund each year until it is paid out in…

TSP funds upon retirement

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Q. I’m retiring in one year. I’m 66 years old with $617,000 in the 2020 L fund. I plan on taking level payments from the TSP. Should I leave the the funds in the 2020, move them to the L income fund, or move them to the 2030 fund based on my life expectancy? A. The correct answer to your question will depend upon the size of those level payments and whether or not the payments may need to continue after your death. There is no one-size-fits-all-for-a-66-year-old solution for this. The answer is different for different circumstances.

Combine TSP accounts?

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Q. My spouse is a postal worker, age 48, who will have eight years of service and plans to leave the workforce in February 2015. She plans to defer retirement until age 62. I am a FERS participant who will have 36 years when I reach my MRA of 56 in September 2019. We both have TSP accounts. When my spouse leaves the workforce next year, will I be able to transfer her TSP into mine so that they are combined into one account? Will they need to be left separate for a number of years or always? What are…

IRA after retirement

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Q. I’m getting ready to retire in February 2015. I have invested in the TSP since 1997. After I retire, is it too late to invest in an Roth IRA since I can’t contribute to my TSP plan? A. The rules for this are complex and depend upon your income, marital status and employment. You should ask your tax preparer to provide you with guidance on this.

Taxable distribution

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Q. I’ll be retiring this year, and using a portion of my TSP account balance to purchase a retirement home. My question is: For example, If I take an Age-Based In-Service Withdrawal of $100,000, and the TSP withholds 20 percent for taxes ($20,000) and I request an additional withholding of $10,000 to cover any tax shortfalls, will the declared taxable distribution be $100,000 or $130,000? A. The withholding is taken from the withdrawal, so the declared taxable distribution will be $100,000, you’ll receive $70,000 of it, and $30,000 will be deposited and held against your tax liability for the year.

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