Q: The main — and probably only — reason I need to transfer my money from TSP to a regular IRA is that I’ll be able to make withdrawals as I wish or as needed. You always advise your readers to consult someone trustworthy to advise us before we do this. My question is, how do we determine who’s trustworthy? I’ve been approached by my bank, credit union, some investment companies, etc., but I just don’t know what questions to ask or what to look for, other than their fees. A: Unfortunately, it’s not easy. But, you can start by…
Q: If the government defaults on their debt on Aug. 2, what would happen to the G Fund? Which TSP fund would be the safest? A: Under the current law, any failure to fund the G Fund as specified must eventually be made up. The principal and returns are guaranteed by the federal government, which remains the best guarantee you’ll find. The G Fund is still the most secure of the five funds.
Q: Each year when my husband receives his minimum distribution from his TSP, the documentation shows a breakdown of where the monies are coming from. Within each fund there is a breakdown of deferred compensation, savings, rollover, DEC/IRA and employer match. So each year some of the minimum distribution is coming out of a regular IRA. (There was a short period of time in the 1980s when money within the Thrift Plan could be assigned to an IRA. I seem to remember it did not last for very long.) Can that portion of the minimum distribution that was originally in…
Q: Can you explain what you meant when you said to buy just enough insurance so that the probability of exhausting the policy benefits is between 10 percent and 20 percent? A: It is possible, although not necessarily easy, to estimate the probability of spending a given amount of money on long-term care insurance during your lifetime. A long term care insurance policy typically contains a lifetime limit on the amount of money it will pay. The goal is to buy enough insurance to reduce the probability of spending more than the amount of insurance on long term care during…
Q: I’m retired, 57, and would like to withdraw a portion of my TSP to put toward the purchase of a new house. Can this be done without an early withdrawal penalty? A: Only if you separated from federal service during or after the year in which you reached age 55.
Q: If I take an age-based withdrawal before I retire, to pay off the house, and start monthly withdrawals from the balance of my TSP funds after I retire, will I be allowed to stop the payments at a later date and purchase an annuity? A: No, but you could roll the final payment from your account into an IRA and then buy a retail annuity from an insurance company from there.
Q: I have seen conflicting opinions on how the FERS annuity supplement is taxed at the federal level. Is it fully taxed, or is it taxed at 50 percent if your combined income is $32,000 to $44,000 and taxed at 85 percent if your income is $44,000? I start receiving the FERS supplement in June and I have to know how it’s taxed for next year’s tax filing. I retired under FERS. I get the supplement from my MRA of 56 years old until I’m 62 years old. A: It is taxed as if it were a Social Security benefit.…
Q: I read that some congressional discussions occurred on the subject of allowing federal workers to transfer all or part of their unused sick and annual leave into their TSP accounts. Are there any discussions on this topic and, if so, do you know the status and if and when this would be implemented? A: Nothing yet, although I tend not to worry about these things until they become law.
Q: Could you please explain the MetLife choice we have for our TSP after we retire? I am trying to decide what to do with my TSP. I am retiring July 1 from the U.s. Postal Service. I would like to know what is the benefit of keeping my money in the TSP until 70 1/2 (I am 55) and what is the benefit of the Met life? I know nothing about this MetLife. Is it an insurance policy? I was always told not to invest in whole life insurance. Where can I read about the met life. Please give…
The Federal Long-Term Care Insurance Program is conducting an open season for enrollment that continues until June 24. The program is always open for enrollment, but during the open season — only the second such opportunity since the program’s introduction in 2002 — active federal employees and their spouses or qualified domestic partners will circumvent the usual medical underwriting requirements in favor of an abbreviated underwriting process. This means that some applicants who would otherwise be declined coverage will be able to get into the program. The open season raises the visibility of the Federal Long-Term Care Insurance Program and…