Q: Where isTSP’s Required Minimum Distribution reported on the Form 1040 Income Tax Return? A: Form 1040, Line 16.
Q: I am a federal firefighter under the Civil Service Retirement System who will be eligible to retire next year with 28 years of service at age 50. When can I start withdrawing funds from my Thrift Savings Plan without getting penalized? A: If you receive a TSP distribution before you reach age 59 1/2, in addition to the regular income tax, you may have to pay an early withdrawal penalty tax equal to 10 percent of any portion of the distribution not transferred or rolled over. The additional 10 percent tax generally does not apply to payments that are:…
Q: I am 53 years old, and I was a U.S. Postal Service employee with 20 years of service under the Federal Employees Retirement System. I took disability retirement from the USPS in March after suffering injuries in Iraq as a reservist. If I take a full withdrawal from my Thrift Savings Plan account, will I pay a penalty to TSP, and at what percentage? How much will I have to pay in taxes? Will the USPS match my TSP balance? And how long must my money stay in a TSP account before I can make a full withdrawal without…
Q: If I buy a battery pack for a CPAP machine, will it be covered under my flexible spending account? A: CPAP devices and supplies (which would include batteries) are eligible for reimbursement from an FSA.
Q: Can money in my Thrift Savings Plan account be rolled over into a Roth IRA, and if yes, what are the rules and when can it be done? A: Yes, certain TSP distributions are eligible to be transferred or rolled over to a Roth IRA. The TSP notice available here will introduce you the rules and limitations.
Q: I recently retired from the federal government. If I take my money out of the Thrift Savings Plan in a lump sum, will I have to pay Social Security and Medicare taxes? A: No.
Q: I am under the Federal Employees Retirement System and have money in the Thrift Savings Plan. I returned to government service after 16 years in the private sector (I was under the Civil Service Retirement System from 1975 to 1987 but was placed in FERS in 2004 when I returned). I have retirement accounts outside TSP, but I find TSP to be easy to manage. I have considered transferring my other 401(k) accounts into TSP, but I have also heard concerns that Congress may target TSP as a source of “revenue.” I will be considering retirement in the next…
Q: I will begin my first federal job soon. I turned 60 about one month ago. Must I work until age 65 to be eligible to receive Social Security or Thrift Savings Plan payments? I will have approximately four years and nine months of creditable service. A: Not necessarily. Your eligibility for drawing Social Security benefits based on your own record will depend upon your age and your history of contributing to the program, among other factors. You should visit www.ssa.gov for details. The rules for contributing to and withdrawing from the TSP are available at www.tsp.gov. In neither case…
Q: As the government treasury bond yields go up, does the Thrift Savings Plan’s G Fund share price increase? The opposite would be true of the F Fund, since share prices would be affected in a negative way with rising interests rates. A: While there are times when the daily return for the G Fund is negative, the monthly and annual change in the G Fund’s share price is always positive.
Q: I’m turning 70 in February, I contribute the maximum to my Thrift Savings Plan, and I plan to work for a few more years. Am I allowed to continue contributing to my TSP in 2011, or will I be penalized with my taxes because I will be turning 70 1/2 in August? Also, will I be matched for my contributions? A: Your eligibility to continue participating in the TSP, including any matching, will continue until you separate from federal service.