Q. I will be 59½ this time next year. I would like to withdraw a one-time lump sum. What is the tax percentage rate I would pay in federal and state (Michigan) taxes? A. The answer will depend entirely on the tax code and your tax return for the year of the withdrawal.
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Q. I been following the news about Cyprus’ banks. I want to find out if our Thrift Savings Plan I Fund money is invested in Cyprus’ banks. If yes, is it good to move money back to another fund? A. No.
Q. I am 64 years old and will be retiring in a year. I have 15 years with the federal government. Do all of my Thrift Savings Plan contributions have to be withdrawn prior to a specific age? I also understand that my total TSP account will be charged 20 percent. Am I to understand that after the 20 percent is subtracted from my TSP account, I have to pay income taxes per year for withdrawals I make from my TSP account that will be added to my total gross income? A. You will be required to begin taking minimum annual distributions…
Q. I am 66 years old and plan to retire in 2014, at which time I would transfer (convert) my Voluntary Contributions Program monies directly into a newly created Roth IRA. However, I have an existing (non-TSP) Traditional (substantial) IRA (never taxed), and know the Internal Revenue Service will aggregate my Traditional IRA balance for purposes of determining the taxability of this VCP-to-Roth conversion. If, prior to retirement, I (in 2013) transfer (direct rollover) my Traditional IRA into my existing Thrift Savings Plan account, will those monies now be considered 401(a), and therefore, making my subsequent VCP-to-Roth conversion occur with…
Q. I’m a 58-year-old FERS employee with 29 years of service. I have two years of leave without pay from while I was mobilized in the Army Reserve (2004-06). I am in the process of paying my military deposit to buy back this time. After returning to federal service, I did not identify that I wanted to catch up on the Thrift Savings Plan and get my TSP matching contributions. I recently read on the TSP website that I could still use the substantial contributions I made to the uniformed services TSP to request my civilian matching contributions. I have…
Q. I have a non-401(k) Roth IRA. Why can’t I roll it over to a TSP Roth IRA? Both are after taxes. A. The rules are the rules.
Q. When retiring, can I take a large sum of my Thrift Savings Plan out before starting my monthly allotment with the remaining amount? A. Yes, as long as you haven’t taken an age-based, in-service withdrawal before you retire.
Q. I just finished paying off a Thrift Savings Plan loan, and the last loan payment was greater than the necessary last payment. Apparently, the difference will be sent to me by check. Does this count as a disbursement? Will I have to pay a penalty on this money? How can I just put it back into the TSP where it belongs? A. It doesn’t belong in the TSP. It’s an overpayment and will be refunded to you with no distribution or tax liability accruing.
Q. Can you elaborate more on the “Ask the Experts” answer at http://blogs.federaltimes.com/federal-money/2011/02/16/rolling-a-portion-of-tsp-balance-into-self-directed-ira/. The answer seems to imply that under some circumstances, Thrift Savings Plan funds can be rolled over into self-directed IRAs. Can you explain the circumstances under which it’s legal, and can you provide references? I’d like to create a self-directed IRA for my husband, who is 45 years old and no longer in federal service, and then use the funds to purchase a rental property, with the monthly rents going directly into the IRA. A. Rollovers are allowed for TSP participants who are no longer federal employees or…
Q. I have both a civilian and military Thrift Savings Plan account because I was mobilized for part of 2011-12. Because I was in a combat zone, much of my income was tax exempt (CZTE). The military allowed me to contribute that tax-exempt income into my TSP. It is not a tax deduction because the income wasn’t taxable in the first place. However, they also made contributions from my taxable income. I thought it was all from my CZTE. When I returned to my civilian job, I began to contribute and maxed out my contributions, not knowing about the earlier…