Q. I’ll be retiring early next year (2012) and would like to learn if (or how) a Thrift Savings Plan withdrawal taken at retirement that is used to purchase or build a primary residence would be subject to federal tax. A. It will be taxed as ordinary income.
Q. I am currently employed and have the option of receiving a lump-sum payment for my pension payout. I would need to roll that over into an account that I could receive a monthly payment from. Do you have any advice as to what kind of plan would be available for me to do that? A. A Roth IRA or an IRA are possibilities. You should consult a planner or tax accountant to figure out which solution is right for you.
Q. I am trying to decide on how to receive payments from my TSP account. How can I get an estimate on how much I would receive through a life annuity? A. There is a calculator on the TSP website at https://www.tsp.gov/planningtools/annuities/annuityCalc_select.shtml.
Q. If I take voluntary early retirement and I am 55 can I start my TSP monthly payments at that time without a 20 percent penalty. Or do I have to wait until I am 59 1/2 to start receiving from my savings in the TSP? A. You may withdraw money without penalty.
Q. We were advised at a retirement seminar to check that we have a copy of the designated beneficiary form for life insurance, the TSP, retirement and unused leave. I do not have a copy of the designated beneficiary form that I completed for retirement and unused leave. Since I plan to work three more years, it behooves me to request these forms. What is the title and/or number of the specific forms I need to complete? A:. Form TSP-3 is used to designate beneficiaries for your TSP account.
Q. While I know it’s not the smartest thing to “put all of your eggs in one basket,” I do have some questions. I began working for the U.S. government in May 2005. I plan to have my entire career in the federal service. Currently, my Thrift Savings Plan account is 100% percent invested in the L 2040 fund. In that time, my contributions and matching funds have grown substantially. But, I also have a rollover IRA from a 401(k) that I had while I worked in private industry. This rollover IRA has not grown much, and I have not…
Q. I am a Postal Service employee scheduled to retire Oct. 1. I am 60 years old. Can I take a partial withdrawal from my Thrift Savings Plan account and invest that portion in a private annuity and then take monthly payments from what is left in my TSP account? A: Yes, as long as you have not already taken a partial withdrawal from your TSP account.
Q. Knowing that everything is a personal situation decision. I’ve gotten advice to take a TSP monthly payout versus the annuity or lump sum. What are the advantages of this action. A. The advantage versus the lump-sum payout is that the monthly withdrawals will allow you to continue to invest the balance in the TSP until it is withdrawn. The advantage versus the annuity is that you retain control of the assets.
Q. Is there a difference for reported income from a Thrift Savings Plan withdrawal versus a TSP annuity payment? In your Q&A, the TSP withdrawal is said to be reported as income while the TSP annuity is not reported as income. Why? A. Distributions from your TSP account and payments from a TSP annuity are both considered taxable income.
Q. I am in the process of transferring my IRA account from my bank to my Thrift Savings Plan account. The majority of my IRA is from old 401k rollovers from previous jobs (pretax). However, there were a few years when I made contributions to my IRA with after-tax money through my broker. I’ve had my IRA for years now and have no idea how much or what portion of it is after-tax money as my broker has made many trades over the years. How can I determine exactly how much of my IRA is pr-tax and how much is…