Q. If I receive a Voluntary Early Retirement Authority from the U.S. Postal Service, can I take a lump-sum withdrawal from my Thrift Savings Plan without paying a penalty? I am 57 years old with 27 years of service. A. Yes.
Q. Can I continue to make biweekly contributions to my Thrift Savings Plan account if I make a partial withdrawal from my account? I am 60 years old. Also, can I withdraw these funds at any time or at a certain time of year? A. Yes, and you may request your age-based in-service withdrawal at any time.
Q. I recently read your article, “Prepare now for possible hike in pension contribution.” 1. Can you respond with your thoughts regarding how proposed pension hikes would or would not affect federal employees with less than five years of service as of Jan. 1, 2013) who are subject to the 2.3 percentage-point increase signed into law by President Obama this winter? 2. How would the possible hike in pension contribution affect a CSRS employee who has over 41 years and 11 months of service? A. 1. With about half the increase I modeled for my article, I’d expect about the…
Q. I retired from active duty in December 2011. I accepted an appointment to a government service position in October 2011 and established a FERS Thrift Savings Plan account. I did not move any of my TSP account balance accumulated during my time on active duty into my FERS TSP account, so I currently have two accounts. Am I eligible to take out a loan against the TSP account balance still residing in my [previously] active-duty account? If not, can I transfer all or part of my [previously] active-duty account into my FERS TSP account with the goal of taking…
Q. I just separated from the military and have an outstanding loan. I recently mailed in the “intent not to repay” form. How long will it take for the Thrift Savings Plan to claim a taxable distribution and close out the loan? Also, if the entire sum of the loan was accrued in a tax-free combat zone, will they still tax the remaining balance? A. I checked with the TSP, and it should take one to two weeks for TSP to declare a taxable distribution once it receives an “intent not to repay” notice. Only the outstanding loan principal and…
Q. I’m thinking of retiring at age 66 (I am FERS). How do I access my Thrift Savings Plan without any penalties or taxes? Is there a limit of withdrawal per month? A. Because of your age at retirement, your TSP withdrawals will not be subject to the early withdrawal penalty. They will be subject to income tax, however, unless you roll the withdrawal over to another tax-deferred account.
Q. When the Philadelphia Naval Shipyard closed in 1995, I withdrew all $29,000 of my CSRS money. I had 16 years of service time at the shipyard. After years of working in the private sector, I have now worked six years (two temporary, four permanent) for the government under FERS. I was told I would have to pay back $61,000 or I would owe $35 a month when I retired (to keep my health insurance.) I do not have $61,000. I have $31,000 in my Thrift Savings Plan account. I am 64 years old and my body is worn out…
Q. I have a loan of $6,000 on my Thrift Savings Plan with 20 payments left. I am 60. If I make an age-based in-service complete withdrawal of my TSP, what happens to my loan and the payments I am making? Do I have to keep making the payments and then wait until I separate from service to receive it, or will it become a taxable disbursement and end my payments? A. Your loan repayment obligation continues until the loan is repaid or you fail to make the required payments and the balance due is declared a taxable distribution.
Q. I am a FERS employee who has 12 years before I can retire. I have already invested $4,000 in a Roth IRA for 2012 and switched all of my Thrift Savings Plan contributions to the Roth option in May. My financial adviser said I could not invest more than a total of $5,000 in both Roth accounts for 2012 and told me to switch my contributions back to the traditional TSP. Is he correct, or can I invest the $4,000 in the Roth IRA and $17,000 in the Roth TSP? In other words, can I still invest the annual…
Q. I have a rollover IRA with Fidelity with approximately $75,000 at current market rates. I am wondering if it is better to transfer this money to my Thrift Savings Plan or leave it where it is? I have eight years until I retire at age 66. What do you recommend? A. Since the TSP offers expected investment performance superior to what you’ll find anywhere else, I recommend that you transfer as much of your portfolio as possible into the TSP and keep it there for as long as possible.