Q. My husband and I are both retiring soon, he under FERS and me under CSRS. His income will be made up mostly of Social Security, while mine will be mostly CSRS. A full annuity for him would cost $425 a month. Does it make sense to elect this annuity given the cost? Would a term life insurance policy be a better alternative? I need to put the paperwork in this week. A. There is no universal answer to this question, but if in doubt, the safe bet is to elect the full survivor benefit for your spouse. To answer this question properly would take…
Q. Are there income limitations on a Roth TSP? For example, can a single person with an income greater than $127,000 contribute to a Roth TSP (in 2013)? A. The contributions are not affected by the size of your income.
Q. I’m pretty pleased with the Thrift Savings Plan returns and would like to know if I can deposit any after-tax money into the TSP. If I have a $100,000 in a CD, can I withdraw those funds (and pay the taxes) and deposit them into my current TSP account? A. No, but you may transfer your 401(k) assets into your TSP account if all of the money in it is taxable upon withdrawal. Use Form TSP-60 and follow the instructions there.
Q. If I have both a traditional and a Roth TSP, can I elect to have all of my contributions (6 percent) go to the Roth account, and still receive the 5 percent matching contributions (FERS employee) that I have been receiving? Is there a required minimum of my contributions that must go to the traditional account? A. The matching formula applies to all of your deferral contributions, Roth or traditional.
Q. I was a federal employee for 10 years, and I want to make a withdrawal of a portion of my funds. How badly will I be penalized for making the withdrawal? I went through a divorce as of Nov. 7, and I am in hardship of funds. A. The answer depends upon your circumstances. If you are talking about the Thrift Savings Plan, you will be subject to the 10 percent early withdrawal penalty on any earnings if you are under age 59½ and don’t qualify for at least one of the exceptions listed on Page 7 of the…
Q. What factors determine whether it is better to pay insurance premiums with pretax dollars or waive that and pay with after-tax money? My thought is that by paying with after-tax money, taxable income is increased, thereby increasing the Social Security entitlement. How do you determine if that is more beneficial than the reduced tax liability now? A. The answer depends on your circumstances and a number of assumptions about the future. The issue is discussed on the Office of Personnel Management website at www.opm.gov/insure/archive/health/pretaxfehb/qanda/23.asp.
Q. I will be eligible to retire Dec. 4 with both minimum retirement age and years of service under FERS. I would like to wait until Jan. 31 to retire to complete a project. I will have 240 hours of annual leave going into 2013. The combination of my lump-sum payment for my annual leave and my January wage earnings would exceed the Social Security earnings limit for 2013. Since the Social Security earning limit is the same as the FERS annuity supplement earnings limit, would this make me ineligible for the special retirement supplement for 2013? If I put all…
Q. In 2011, following 18 years of government service at age 60, my excepted service position ended unexpectedly. My retirement pension is small: $589. My first payment arrived February. I had $10,000 in savings with Fidelity but used that to live on, considering the lack of income for two to three months and basic living requirements: mortgage, insurance, car payments, son leaving for college, etc. I paid taxes on that money, approximately $3,000 or more. That money is now gone. When I retired, I had two Thrift Savings Plan loans that were rolled in as income on my taxes. They…
Q. Can a retiree withdraw money from the Thrift Savings Plan more than once? How many times? A. You are allowed one partial withdrawal and one full withdrawal per lifetime. The full withdrawal can be taken as a series of monthly payments, which you can terminate with a lump sum distribution of the remainder. The withdrawal limits are clearly explained at www.tsp.gov.
Q. I am an unmarried federal employee. I max out my contribution to the Thrift Savings Plan. I plan to work until at least 62, which will give me 21 years of service, or possibly until 65 with 24 years. As a federal employee in FERS and with TSP, what is the best way to provide income for two siblings when I die? I am not opposed to taking a reduction in monthly benefits if that is the best way to do so. My home will be paid off in 2014. I have no other debt and live on about…