Q. What are the MetLife annual and/or one-time fees charged after annuity is purchased? A. The only fee is the initial cost of the annuity, which depends upon your age, the annuity you purchase and the interest rate index at the time of the purchase.
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Q. I recently lost my job and withdrew my entire Thrift Savings Plan savings. I know that there is a 20 percent penalty for early withdrawal that they took out. Also, another 10 percent penalty that they hit you with at the end of the tax year. Is there any way I can lessen the blow? Are there any exemptions that I could put that money to, such as paying of my son’s college loans, home improvement or repairs? A. The 20 percent taken from the distribution was withholding against your federal tax liability for the year of the withdrawal. The…
Q. I have read Q&As on your site that refers to using one’s life expectancy as basis for selecting a particular L Fund. Per the Thrift Savings Plan site, L Fund investment mixes (and recommended strategy for selecting) are based on the time horizon vis-a-vis one’s projected retirement date — hopefully a different date than one’s life expectancy. Could you please explain the reference to life expectancy? A. Using your life expectancy to select an L Fund, rather than your retirement date, is my recommendation based on years of working with clients who are trying to safely maximize the standard…
Q. Should I move everything to the G Fund now that we are shut down and there is the possibility that the government could run out of money within the next few weeks, forcing an unprecedented default? A. That’s like telling me you’re driving and asking if you should hit the brakes! I don’t know where you’re going, when you need to be there, what you’re driving or how much gas you have in the tank. The person responsible for delivering you to your destination on time must make that decision based on their assessment of the situation and their…
Q. I was first employed by the Defense Department in October 1982 and placed in CSRS. During a reduction in force, I lost my position in July 1994. In 1996, I withdrew my CSRS contributions and had them rolled into an annuity with American Express (now Ameriprise). In November 1998, I was rehired by DoD and became a FERS employee. When I was rehired by DoD, I took the funds I had earned at my previous (1994-1998) job’s 401(k) and rolled them into the same annuity with Ameriprise. I am now nearing retirement age and plan to buy back the CSRS…
Q. I am 70 years old and still employed by the federal government. When I am 70½, I understand I must take a required minimum distribution from my traditional IRA/401s, but not clear if this applies to my Thrift Savings Plan account. Can you please tell me what the rules are for those who are 70 and over but still working for the government insofar as taking a required distribution from my TSP account? Can I wait until I retire from government? A. You may wait until you retire. You may also be able to transfer your IRA/401k balances into the TSP…
Q. I plan on withdrawing a six-figure sum from my Thrift Savings Plan after Nov. 30, when I am 59½. If I withdraw the money in 2013, will it count toward my earnings as far as taxes are concerned? If so, should I wait until 2014? I plan on retiring in May 2014. A. To the extent that they come from your traditional TSP balance, your withdrawals are added to your tax return for the year in which the payment is constructively received. You should consult a competent tax adviser for guidance on when it will be best to take your…
Q. Do you feel it would be wise to transfer my Thrift Savings Plan funds from the L2030 to the G Fund during this government shutdown? Isn’t money in the G Fund more secure, while the L2030 is prone fluctuations in the market? Is the market likely to take a big hit during the shutdown? My balance is $109,000, all in the L2030, and I still have about 20 years until retirement but may not stay federal the whole time. A. If you want to try to time the market, you’re on your own. The safest and smartest thing to do is to…
Q. The Dow Jones was down on Sept. 30 by 128.57 points, yet the S Fund only decreased from 31.0512 to 31.0038. Why such a small drop in S Fund? I called the Thrift Savings Plan and no good answers. A. Because the S Fund isn’t the Dow Jones Industrial Average. Different markets often do different things at the same time.
Q. I anticipate retiring within the next six to 12 months with 34 years of service and a projected $350,000 Thrift Savings Plan balance (diversified in the L Fund). In the latest meeting with my financial adviser, he recommended that, upon retirement, I consider taking a portion of my TSP balance and purchasing a product that would guarantee an income stream at a minimum percentage of growth over time regardless of the bond or stock market performance. He called it a GWIB (??) He pointed out that there are numerous products to choose from and they all offer different benefits. In general, can…