Q: I am 57 years old and plan to retire in two years. I have basic Federal Employees Group Life Insurance plus two times optional coverage. My total annual premium is nearly $1,900 for roughly $400,000 of insurance. Equivalent coverage in the open market is considerably cheaper. Is there any advantage to retaining my FEGLI coverage as I approach retirement? A: The major benefit, assuming that you are insurable at more attractive rates on the retail market, is that if you retire with basic FEGLI coverage, you can, once you reach age 65, retain 25 percent of that coverage, at…
Q: A few months ago, I read something about federal workers being able to deposit the lump-sum payment for unused annual leave into their Thrift Savings Plan accounts when they retire. Did this happen, or is it just a proposal? A: A bill (HR 4865) was introduced in March that would allow this rollover, within certain limits, if passed into law. It is still in committee.
Q: I am a federal employee with $60,000 in my nondeductible individual retirement account. I plan to convert it to a Roth IRA this year. I also have $120,000 in my traditional IRA which I do not plan to convert to Roth this year. To avoid the Roth conversion aggregation rule, my plan is to roll the $120,000 into my Thrift Savings Plan account before converting my nondeductible account to a Roth IRA. This way, the $120,000 will not be subject to the Roth conversion aggregation rule this year. Is this a valid way to avoid the rule? A: I…
Q: I will reach age 70 ½ on March 31, 2011. I understand that I must begin withdrawal from my Thrift Savings Plan [and rounded over IRA] by January 2012. I plan to continue to work in my present position for the federal government after January 2012 up until April 2013. 1. Am I required to begin to withdraw my combined TSP/IRA in January 2012, or may I delay withdrawing these funds until I stop working in April 2013? 2. What law, directive, statue says so? 3. If I am required to begin withdrawal in January 2012 but continue working…
Q: I retired with a Federal Employees Retirement System Thrift Savings Plan account and am 60 years old. I would like to make a partial withdrawal and understand it will be taxed 20 percent by the federal government. At the end of the year, they will send a 1099 form to be used for federal income filing. I still have two children in college and am currently paying for that. Will I be able to recoup some of the income tax paid from my withdrawal if all works out on my federal tax form (education credits)? Or is this tax…
Q: I have a question about withdrawing money from my Thrift Savings Plan account. I would like to know as many details as possible, to include penalties and how long it takes to receive my funds, as well as if I’m allowed to deposit a lump sum in the future to make up for what I took out. A: You’ll find the information your looking for at http://www.tsp.gov.
Q: I am a federal employee with a fairly complicated work history. The Office of Personnel Management tells me that to obtain full credit for all of my time served, I owe approximately $60,000 in deposits and redeposits. It’s worth it to me to pay that amount, because it means the difference between 34 years of service and about 20 years of service if I were to retire now. I just turned 59 1/2. What I would like to do is withdraw the money from my Thrift Savings Plan account and send it directly to OPM to pay off my…
Q: I’ve been in civil service for 4 1/2 years. I’ve been in Thrift Savings Plan for about 3 years. I have my TSP invested 100 percent in the I Fund. I intend to work maybe another 10 years. I was thinking about putting 35 percent in the S Fund, 35 percent in the C Fund and the rest in the I Fund. The percentages are not set in stone but I am thinking about investing in the S Fund and the C Fund. Any suggestions? A: I can’t provide specific investment advice through this forum — it would be…
Q: I’ve been participating in the Thrift Savings Plan since the late 1990s and am trying to learn how much of my current balance is made up of contributions and how much is based on earnings. TSP will only provide the various contribution category totals (mine, agency matching and agency basic) with the associated earnings included. I would like the earnings broken out so I can see my account’s performance over the years. Is there a way to calculate this without going back through more than a decade of statements? A: No.
Q: I have always heard/read that to live at the same standard in retirement, you would need to have approximately 80 percent of your salary when you retire. Although I think I know the answer to my question, I would like to hear your response. My question is: Is it the annual gross pay minus my TSP contribution that I take home to live on, or my annual gross pay before I take out the TSP contribution that one would use for the 80 percent calculation? For example, I am over 50, so I take out the maximum $16,500 plus…