Q. When money is deducted from my salary to repay a Thrift Savings Plan loan, is it deducted after it is taxed or before it is taxed? Also, is money received from a TSP loan taxed as income (assuming no payments are missed)? A. Your loan payments are made with after-tax dollars. You loan proceeds are not taxable income if you repay the loan as due.
Q. I have been taking monthly withdrawals from my Thrift Savings Plan account for several years. I will turn 70½ this year. Do my prior withdrawals affect the amount of the required withdrawals? A. The required withdrawal each year is based entirely on the closing balance in your account at the end of the calendar year preceding the year for the withdrawal.
Q. As a retiree, can I convert my Thrift Savings Plan account to a Roth TSP, or is this only available to active employees? A. You may not convert traditional TSP balance to the Roth TSP, regardless of your employment status.
Q. Overview: I began in the Air Force Non-Appropriated Fund in 1996, enrolled in NAF retirement plan in 2000, ported to GS in 2005 with deferral of my NAF retirement (calculated at 5.27 yrs) and entered FERS. My current GS position will be abolished in 2014 (at nine years FERS). I have the potential of porting into a NAF position. I wish I had just retained NAF retirement, but lack of research and misguided human resources recommendations led me to where I am with a split retirement outlook. Given my FERS time will total only nine years at abolishment, if I move…
Q. I am retired FERS and just turned 70 and need to begin taking TSP withdrawals. I am looking to roll the entire amount into Fidelity and was wondering if anyone has done so and how their experiences have been. They do seem to have more options and perhaps can help earn more than TSP, but I’d appreciate any comments. A. Fidelity’s expenses will be higher than the TSP, so the expected rate of return on your assets will be lower. Leaving the TSP for higher returns is a sucker’s bet, plain and simple.
Q. Retirement date: Sept. 15, 2017, at age 62. Retire as GS-13, Step 7, FERS, with 38 years total service (figure includes my nine years military, bought back). TSP: About $250,000, Social Security paid in full to receive full benefits for a 62-year-old. I live in Washington state. I expect to pay spouse survivor benefits, federal income tax. Should I leave my Thrift Savings Plan alone or draw it out entirely? A. Leave your TSP alone for as long as possible.
Q. At age 55½, what is the best L Fund I should put $5,000 in? In five years, what is the expected gain of the $5,000? A. The best fund for you depends upon your unique set of goals, resources and constraints. Anything else is just a guess. Your age is not really a direct factor in making the choice. You’ll find information about the L funds, and suggestions for picking a fund (based on a guess), at www.tsp.gov.
Q. Is it possible to do partial transfer of Thrift Savings Plan funds once you leave the government? Could I transfer 50 percent of my TSP funds into an IRA and retain the other 50 percent in my TSP account? A. Yes, as long as you haven’t already exhausted your single TSP partial withdrawal allowance.
Q. Can I maximize my Roth TSP contribution ($17,000) and also contribute to a regular Roth mutual fund up to the $5,500 limit? A. Depends upon your marital status and income. Check IRS Publication 590 or ask your tax accountant for the answer.
Q. I will be retiring with 20 years active-duty military in two years and am thinking about tapping into my Thrift Savings Plan for a 20 percent down payment on a home. I realize withdrawing early includes penalties I don’t want to pay. Would taking out a TSP loan be my best option? I’d like to use about $30,000 toward my retirement home, and the interest rates seem low enough I wouldn’t take that much of a hit. A. If you can repay it, a loan would be a reasonable way to avoid the early withdrawal penalty.