Q. I’m a FERS employee with the U. S. Postal Service and plan on taking a monthly TSP withdrawal when I retire at 64. I assume that the dollar amount can be changed either up or down at the beginning of each year. Is my assumption correct? A. Yes.
Q. Is there a way to withdraw money from my 401k or TSP without paying a tax penalty, in order to use the money to pay for college tuition for a child? A. The rules are complex, but there are ways around the early withdrawal penalty. Read the notice at the following link for more information: https://www.tsp.gov/PDF/formspubs/octax92-32.pdf. Pay particular attention to the left side of Page 4.
Q. I am retiring Nov. 30 and considering using a lump-sum withdrawal from my TSP to pay off my mortgage. I have read material at the TSP website and Googled my questions but not found a clear answer about the tax withheld. What is the federal tax percentage on a lump-sum withdrawal? I am 63 ½ and not withdrawing all funds. I would be making one withdrawal, leaving the balance to continue the investment, and no intention of future withdrawals. A. The TSP will withhold 20 percent of the distributed amount for federal taxes.
Q. I’m a widower retired on CSRS with a pension that provides me with enough to live on. I’ll turn 70½ in 2012 with about $200,000 in my Thrift Savings Plan. Starting in 2012, I plan to take the required minimum distribution from my thrift plan each year. The question is how to allocate my money in TSP — which plans to put my money in. A. The answer depends upon your goals for the money, and how important it is that it achieve those goals. Your question is like asking which way you should turn the wheel in a…
Q. I know that the TSP annuity means giving up your money forever, something to be carefully considered. I’m still trying to understand the math. If at age 62 I bought a $100,000 annuity, even at today basement rates of 2.37 percent, it would pay $497 a month, or $5,964 a year. That’s equivalent to earning a steady 5.964 percent on your money! How does 2.37 percent turn into almost 6 percent? I’m guessing that Met Life is figuring that some of us aren’t going to live long enough to collect a great amount on the annuity. Is that it?…
Q: I am a CSRS employee with 34 years of service. Should I take a VERA at the age of 53? What penalties will be imposed on my TSP? I would like to draw it out in one lump sum and invest it in an annuity recommended by my financial adviser. A: You will be subject to the early withdrawal penalty unless you roll over the withdrawal into an IRA. You may want to think carefully before following your “adviser’s” recommendation. I suspect that he/she is actually a salesperson who is compromising your interests in favor of their own! I…
Q: I plan to retire next year. Can I leave my TSP contributions in the TSP and take no monthly payments/distributions at this time? Are there any negative consequences to this decision? A: Yes, you may. There are no negative consequences, and I advocate that you leave your money in the TSP for as long as possible.
Q: I retired with both CSRS and FERS components during my federal tenure. How is my COLA calculated? Is it calculated based on both respectively or is it based solely on the latter FERS component? A: Each component will have its own COLA computed using the appropriate formula.
Q: Can you purchase a life annuity after you have been retired for several years? A: Yes.
Q: I plan to retire in January at age 68. Can I leave TSP contrbutions in TSP and get monthly payments for the remainder of my life? A: Yes. File form TSP 70 and request monthly payments based on your life expectancy.