Q. I am 59 and am going to retire next year. I am in CSRS. I have a loan on my Thrift Savings Plan, which, if I retire next year, won’t be completely repaid. Do I have to repay it, since it’s my money and I can withdraw all of my money from TSP when I retire? A. No. If you don’t repay it, the outstanding balance will be declared a distribution and will be reported to you as taxable income. Since you are retiring after the year in which you reached age 55, there will be no early withdrawal…
Q. I am 72. My wife is 62. I get $1,700 a month in pension and $1,700 a month in Social Security. My wife gets $5,800 in pension. We put $70,000 in a mutual fund three years ago. It is now $80,000. I would like to take out $20,000 a year. I have health problems. Good idea or not? A. You have the “idea” of spending money that you’ve saved and invested in mutual funds, and you want to know if your idea is a good one? That’s like asking if your idea to eat the leftover birthday cake is…
Q. My husband was a temporary federal employee for the Defense Department for five years. He was laid off in August. He had two years of military service, which he bought that time back, so in essence he has seven years of federal service. He is 60 years old. He put 10 percent of his salary in the Thrift Savings Plan. Should he leave that money in TSP or put it in another vehicle? Also, when he reaches retirement age (62), will he receive a pension for the seven years of federal service? He left DoD with a sick leave…
Q. When I retire under FERS, can I get all of my Thrift Savings Plan monies, Social Security and my annuity? Can I roll over my TSP monies without paying 30 percent of the total to the Internal Revenue Service? If so, what amount of tax-deferred monies, once rolled over, can I take out monthly without a penalty or have to pay taxes? A. Mike: Once you retire, you may withdraw your TSP money. If you retire during or after the calendar year in which you reach age 55, your TSP withdrawals will be exempt from the early withdrawal penalty.…
Q. I know that the Social Security supplement is reduced for any earnings above $14,640 (in fiscal year 2012). If I retire under FERS at my minimum retirement age but my wife keeps working at her job, will her earnings count toward that $14,640? Also, would distributions from my Thrift Savings Plan count toward it? A. Mike: Your TSP distributions do not count as earned income. Reg: The Social Security earnings limit applies only to your own earnings from wages and self-employment, not anything else.
Q. I am a FERS employee, and I’m considering a June 1, 2013, retirement date. I will be 57 years old and have 29 years of service on that date. I understand that I would take a 5 percent reduction on my FERS pension for each year under age 62. Will I be eligible for the special retirement supplement? Can I take monthly withdrawals for my Thrift Savings Plan account without being liable for the early withdrawal penalty? A. Mike: If you retire during or after the calendar year in which you reach age 55, your TSP withdrawals will be…
Managing your Thrift Savings Plan account and other investments to produce the retirement income you’ll need is a challenging and, sometimes, fearsome responsibility. One of the things I’ve noticed in working with investors is that often the most basic elements of the financial planning and management process are overlooked. Trying to make investment decisions without the necessary understanding of your goals, resources and constraints is like worrying about which way you should turn next without knowing where you’re trying to go next, how much fuel you have and how fast your airplane can fly. This “seat-of-the-pants flying” is the norm…
Q. I’ve worked for the Food and Drug Administration for 18 years. I started investing in the Thrift Savings Plan about 10 years ago and don’t plan on retiring until 2030. I’m investing 15 percent right now, and I plan on doing more. I’ve been advised to invest in the L Funds. But lately I’ve been looking at the F, C, S and I funds, which are doing so much better than the L. I want to switch to the one that’s earning the most. Isn’t the L fund for those who are ready to retire within a couple of years? I’m…
Q. I have a Thrift Savings Plan loan that I would like to pay off and was wondering if there was a way to do it by transferring funds from my personal IRA. First, would a direct transfer work at all? Is there any way to designate that transfer to count against the loan? Second, since I should pay back the loan with post-tax funds, if I do a rollover from a Roth IRA, can I then put it in the TSP as a loan payment? Because I’m under 59½, will I get the early withdrawal penalty, even though I…
Q. I am 55 years old and retiring from federal service in March. Once I retire, can I withdraw all the funds in my Thrift Savings Plan account? If so, will I have to pay a penalty for early withdrawal of my TSP account? A. You may withdraw your TSP assets after you retire. If you retire during or after the calendar year in which you reach age 55, your TSP withdrawals will be exempt from the early withdrawal penalty.