Q: There is talk going around about a buyout for those eligible for early out retirement. I am eligible for early out retirement. Would the buyout be offered to someone who has a TSP loan? I know that a TSP loan must be paid off by time of retirement, and this is a plan that I would use (the buyout) to pay off the TSP loan. A: Retirement buyouts are not contingent upon TSP loan status.
Q: I am retiring in July at age 56.6. Do I have to wait until after the day of my retirement to transfer any IRA money to my TSP? Do I only have 30 days from retirement to make that transfer? Can I start withdrawing that money from my TSP immediately, or do I have to wait until age 59.5, since it’s IRA money? Or do all resrictions end once it’s transferred to TSP? A: You may transfer eligible money into the TSP at any time – before or after your retirement. Once the money is transferred into the TSP,…
Q: Does this mean I can’t take a loan or retirement withdrawal until the government stops using TSP for government spending? A: No.
Q: If offered voluntary retirement at age 49 with 25.5 years of service, would an individual be able to not take a 72t withdrawal of their TSP starting at a later age, say 53 or even 56, or would they have to start the 72t withdrawal when early retirement is taken? A: The 72t withdrawals can start any time after you separate from service.
Q: With all of the debate concerning the debt ceiling, what is the safest allocation for money in my TSP. Should I put everything into the G fund, or is there a danger of the government taking that to cover its debt? A: The best allocation for your TSP account is the one that supports your lifetime financial objectives with the minimum of risk. You’ll have to do the necessary analysis to determine which allocation this is. The debt ceiling really shouldn’t be a factor in your investment strategy.
Q: I am looking at retirement in about 18 months. I am in CSRS offset. I’ll have 31.5 years total service and about 1,500 unused hours of sick leave. I left the government for about 10 years from June 1982 to February 1991 and took my retirement out. I owe about $25,000, but not real sure. I can repay it out of IRA and 401(k) accounts, I just don’t want to pay taxes on the withdrawals, since I cannot roll the IRA from the original withdrawal back into the CSRS retirement. Any thoughts? A: Rules are rules. To the extent…
Q: I am a postal clerk. I am 51 and I put 10 percent into TSP. I have traditional IRA (American Funds Growth of America , Income Fund of America, High Income Trust and Capital Income Builder.) Their reports claim the return is a better rate of interest than an unmanaged S&P 500 fund. Management fees are 0.6 percent. Am I better off rolling this IRA into my TSP account? A: Yes. The TSP has lower expenses and a better expected risk/return profile than these managed funds. As their prospectus clearly states, their past performance claims are irrelevant to the…
There is a new version of the interactive Ballpark Estimate calculator, for use in estimating how much you’ll need to save for retirement, available. The calculator has been around for a while and is produced by the Employee Benefits Research Institute, a nonprofit organization dedicated to studying retirement in America. The EBRI recently updated the calculator, which is available through a link at the Thrift Savings Plan’s website, under the Planning and Tools tab. Back in 2007, I dedicated a column to the perils of using the calculator to plan for retirement. At that time, I was unenthusiastic about the…
Q: I am 57 and hope to retire at 62. I have FERS and I put in 25 percent. My husband says I should stop contributing to FERS because this would increase my income for Social Security benefits reporting. Do you advise this? A: First, I assume that you’re talking about contributing to the Thrift Savings Plan, since the FERS question you posed makes no sense at all. Second, your husband is misinformed. Your TSP contributions escape current federal and state income tax, but not Social Security and Medicare contributions. You should continue to contribute as much as you can…
Q: I am retired from the U.S. Postal Service and I am receiving full withdrawal monthly payments from my Thrift Savings Plan account. Is there or will there ever be a chance to change that decision and purchase an annuity through MetLife A: Yes. You may use form TSP 70 to complete a full, final withdrawal and direct the proceeds into a MetLife annuity.