Q. I think I will be retiring Dec. 31, 2015 (under FERS) since my minimum retirement age is 56, and will reach it on Dec. 21, 2015. I will have 31½ years in federal civilian service. Can I start my Thrift Savings Plan monthly allotments right away (I have over $390,000 as a balance as of today) to supplement my 31 percent of salary from FERS retirement and special retirement supplement? A. Yes, you will be able to begin withdrawing from your TSP account as soon as TSP receives notice from your agency.
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Q. I retired early with more than 20 years of service due to work-related injuries. I am 50. I have more than $314,000 in my Thrift Savings Plan. I want to withdraw either a partial or full amount but also want to avoid the 10 percent penalty tax. If I transfer my money to an IRA, then make a withdrawal, will I be able to avoid the penalty? What are my options? A. You should consult IRS Publication 590 for the exceptions to the early withdrawal penalty that apply to IRAs. See Page 7 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf for…
Q. I am married, 60 years old and a FERS employee. I am not sure when I plan to retire, but I have a Thrift Savings Plan account and other investments. I would like to transfer as much as I can to the TSP account to have the best return. How will I be taxed on the money if it is going from one investment company to my account and then directly into TSP? Will it be taxable income for 2014 even if it was just a transfer? A. Transfers from a retirement plan account into the TSP are not taxable.
Q. If I want to withdraw all of my Thrift Savings Plan account at 59½, do I have to retire? Or can I keep working? A. You may take one age-based in-service withdrawal from your TSP account while you are still working.
Q. Could you please explain the difference between the traditional Thrift Savings Plan and Roth TSP? I was told that the traditional TSP is taxed when you begin withdrawing it at retirement. And that only the government’s contribution to your retirement (let’s say they matched my 5 percent) is the only portion that is taxable when withdrawn; my contribution is not taxed at withdrawal. Is this correct? A. Basically, you fund the Traditional TSP with pretax deferrals from your paycheck and pay tax on money as it is distributed to you later. You fund the Roth TSP with post-tax deferrals…
Q. I am an FERS employee and, for various reasons, have selected Nov. 28, 2015, as my retirement date, age 60+ with 21 years civil service and four years military, for which a deposit has been made. One of the many reasons that I selected this date was so that I could have a Thrift Savings Plan residential loan balance declared as a taxable distribution during the 2015 tax year, because I will have substantial withholdings by that time, and given my tax return history, would have a significant tax overpayment that would be useful in paying a portion of…
Q. I have 38 years with the federal government. I have 240 hours of stored leave and, if I save my annual leave this year, I will have 208 hours of annual leave. This equates to 448 hours times my base pay, which is $33.92 for $15,196. When I retire at the end of this year, can I roll my lump-sum payment over to my Thrift Savings Plan account before taxes? A. No.
Q. I sent TSP Form 77 to the Thrift Savings Plan requesting that funds be withdrawn from my account and sent to a non-TSP IRA. When I returned from overseas, I discovered that a mistake had been made on the forms and instead of all of the requested funds going to the IRA, TSP sent 50 percent of the funds to the IRA and 50 percent to me less a hefty amount to the Internal Revenue Service. I asked for a reversal of the action, but the Federal Retirement Thrift Investment Board turned me down, saying that TSP had not…
Q. In your Dec. 16 column, you suggest leaving money in the Thrift Savings Plan as long as possible. I like the suggestion to withdraw only the required minimum distribution when the time comes. I am confused how this is done since, unlike the mutual fund companies, the TSP doesn’t seem to have an option of partial withdrawals. A. You’ll have to initiate monthly withdrawals to meet the requirement. Since you can’t go from automatic withdrawals based on your life expectancy to fixed monthly withdrawals, you’ll retain more flexibility by sticking to fixed monthly withdrawals. If your monthly withdrawals fall short of…
Q. A recent question read in part: “I have more than four years until military retirement (April 2018). At that time, will I be able to transfer all Roth TSP contributions to my Roth IRA? I have no plans of transferring the traditional TSP balance. The goal is to combine Roth TSP/Roth IRA contributions and pay cash for retirement home.” I agree that if you take a monthly withdrawal from the Thrift Savings Plan, they take from both traditional and Roth accounts. But I thought the TSP 90 form allowed transfer of Roth TSP contributions to a Roth IRA fund or…