Q. I am in under FERS. If I retire after 30 years of federal service at age 58, can I start withdrawing my Thrift Savings Plan, or do I have to wait until I am 59½? I do not have any part of the TSP as a Roth. A. Under the circumstances you describe, you may begin withdrawals without penalty.
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Q. Someone asked you online Oct. 8 if they could deposit funds into the Voluntary Contributions Program and transfer “the whole amount” into a Roth TSP. You said “yes.” The poster said they thought they could only transfer interest to TSP. By asking if they could transfer “the whole amount,” I believe they were wondering if they could transfer both contributions and interest. You have said as recently as an answer given on Sept. 24 that “You’ll have to use a Roth IRA for the after-tax portion of the VCP account,” and gave a corrected answer to a question posted…
Q. I’m CSRS. If I deposit funds in my Voluntary Contributions Program, I thought I could only transfer interest gain to TSP. Can I transfer the whole amount if I choose Roth TSP? A. You may not transfer or convert money into the Roth TSP. You could roll the money over to a Roth IRA, however.
Q. Is there any way to manage one’s Thrift Savings Plan account so as to effect a bucket strategy of withdrawal? My reasoning is that not all funds will be up in any one year. I would like to have a three-to-five-year bucket (G Fund) for the lifetime monthly withdrawals and a six-to-10-year bucket for asset growth (C, S and I funds). Periodically, I would move money from the longer-term bucket to the shorter-term bucket. As it stands now, withdrawals come out of each fund based on the percentage in each. My reasoning is that the rock bottom expense ratios…
Q. I received a packet from my previous employer that I needed to cash out or roll over my funds to an IRA or another retirement fund. I’m 48 years old. Where can I put this fund without having to pay a broker or a financial adviser fee? Is there a fund that I can roll this into without upfront fees or an annual fee? A. The best place for this money is your Thrift Savings Plan account. You can use form TSP-60 to request the transfer.
In managing your Thrift Savings Plan account, you have one way to succeed and two ways to fail. You can succeed only by achieving your goals with little or no forced compromise along the way. You can fail by either failing to achieve your goals, or by living further beneath your means than necessary — in essence by being too cautious — and leaving money “on the table” in the end. Retirement investing is ultimately about producing cash flow — money to spend when you need it. This is also referred to as liquidity. What good is it to be…
Q. I just retired at 55 from the Postal Service. Can I roll over a traditional IRA into my Thrift Savings Plan? A. Yes, as long as the IRA contains no after-tax money.
Q. Your Sept. 24 column in Federal Times made the suggestion to increase allocation in the G Fund at the expense of the other funds, including the F Fund. I have not normally been heavily invested in the F Fund in my 25 years. However, with the F Fund having the second-highest return of any fund since its inception (5.86 percent); that it has never had a negative yearly return; that there is a continually declining performance of the G Fund; and the low probability that interest rates will go up any time soon, I see the F Fund as…
Q. My wife is retiring Oct. 26. I hear that it is taking six or more months to finalize your retirement and receive your first retirement check. Can she begin receiving payments from her Thrift Savings Plan account as soon as she retires or does she have to wait until she receives her first retirement check and her retirement is finalized? She would like to start receiving monthly payments in January. A. As soon as her agency notifies TSP that she has separated from service, TSP will process her request for monthly payments.
Q. I left federal service (did not retire) at age 57. If I opt for a lump-sum payout, will I just be taxed 20 percent? I keep seeing the additional 10 percent tax before age 59½. Also, are there additional taxes to be paid if I do not roll over into a traditional IRA? A. You will be exempt from the early withdrawal penalty since you separated from service during or after the calendar year in which you reached age 55. If you do not roll your withdrawal over, it will be taxed as ordinary income when you file your tax return for…