Q. I have been working under federal Law enforcement for seven years. I started when I was 21. So at age 46, I will have 25 years of law enforcement. If I retire at 46, can I have access to my TSP, and what are my choices for withdrawals or the penalties to take out? A. You’ll have access to the usual partial (Form TSP-77) and full (Form TSP-70) withdrawal options as soon as you retire. Unless you meet one of the exceptions listed on Page 7 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf, your TSP withdrawals will be subject to the…
Q. My wife works for the federal government and in the next two years will retire at 60 with 27 years of service. We have been trying to max out her TSP and catch up contributions. We have made deposits per your advice of $673 and $211 for regular contribution and catch-up. However, as I look at the calendar for 2015, it appears that there will be 27 deposits due to the way the holidays fall at the beginning and end of the year. Should contributions be adjusted based on 27 deposits vs. 26 to ensure limits are not exceeded,…
Q. Can you please provide a citation to your assertion that an annual leave payout is not considered earned income and cannot serve as the basis for IRA contributions? A. See the sections on what is, and what is not, compensation on Page 8 of IRS Publication 590. I believe it is considered deferred compensation, but in the end, how you should proceed is a question for your tax preparer.
Q. I’m 23 and recently began my FERS career with the government this past May. I contribute 5 percent of my income and plan on increasing the amount by 1 percent every year and 2 percent every GS level increase. What would be the best spread across the five basic funds for someone willing to work 40+ years in government service with a moderate amount of risk? Additionally, is there a limit where increasing the percentage beyond a certain point (besides the $52,000 yearly max) begins to yield diminishing returns when compared to other investment methods? Finally are there any…
Q. I read an article that says law enforcement and firefighters have to pay a 10 percent penalty if withdrawing prior to age 59-1/2. In 2019, I will have 25 years of federal firefighter service, so I was caught off guard. Can you site a regulation that says federal firefighters do not have to pay the 10 percent penalty and can begin withdrawing immediately upon retiring with years and/or age requirements met? A. Under current law, your service time and status is irrelevant. Unless you retire during or after the year in which you reach age 55, or qualify for…
Q. I’m a 40-year old mailman with 17 years service. I plan on leaving the post office when I hit 52 (30 years service). I understand I need to leave my TSP alone until 55 without penalty. My house will be paid off before I’m 51. I plan to work part-time with less stress after 52. I have $91,000 in traditional TSP now ($15,000 in L2030), the rest in G fund. I just switched from 10 percent to 15 percent payroll withdrawal. Should I change my contribution to 100 percent going into L fund, or remain with my current 70/30…
Q. If I retire at my MRA, which is 56, with 31 years of service, will my distributions be subject to the 10 percent penalty if I am under age 59-1/2? A. No.
Q. I am in the National Guard and I am a civil service employee. Is the annual maximum contribution for the TSP the combination of the two, or is it for each individual account? Can I contribute in 2014 $17,500 to my Guard TSP, then $17,500 to my civilian TSP account as well? A. Unless there is a special exception for Guard pay, the limit is combined.
Q. If I retire in December under MRA +10 and I’m 59 years old, how long do I have to wait to request a full withdrawal with monthly payments? Also, can I request the same day to take a partial lump-sum withdrawal, or do I have to do them separate?
Q. I saw your response to a TSP question about what happens to an account that is giving monthly payments (not annuity) when you die; payments stop and remaining funds go to the beneficiary. If your beneficiary (wife) also has a TSP account, are there any ways to transfer that to her TSP vs. lump payout if you die?