Q: During the Obama campaign, there was talk of allowing up to $10,000 penalty-free 401(k)/Thrift Savings Plan withdrawals for hardship purposes. Have you heard whether this has been passed into law yet? A: It is my understanding that penalty-free hardship withdrawals are permitted under certain circumstances. You should start with IRS Publication 590 or consult a qualified tax adviser for details. I recommend using someone who would be responsible for preparing your return for the year of the withdrawal.
Browsing: 401(k)
Q. I am a federal employee and contributing the maximum of $16,500 to the TSP. I also have a sub-chapter s-corporation and earn outside employment income. Can I open a 401(k) under the corporation and make additional pretax contributions to this account? A. No. The limit applies in the aggregate.
Q: I retired three years ago at age 56 with 33 years of civilian service in the Civil Service Retirement System. I elected to take my Thrift Savings Plan contributions and roll them over to a qualified program. I began drawing off my investment in the fall of 2008. After talking to our tax adviser this year, I learned that I was penalized for early withdrawal in 2008 and will be again in 2009 because I will not be 59 1/2 until June of this year. After attending a retirement seminar several years ago, I was informed that because I was…
This is my last Money Matters column for 2009, so I’ll take the opportunity to remind those of you who are still active federal employees to carefully plan your retirement savings contributions for the coming year. Unless there is a compelling reason to do otherwise, I strongly recommend you first direct your retirement savings contributions into your Thrift Savings Plan account — before you contribute to any other accounts. You should contribute the maximum allowed to your TSP account — which in 2010 is $16,500 if you are under age 50, or $22,000 if age 50 or older — before…
Q: If after I retire, I want to combine my Thrift Savings Plan and a 401(k) that I have, can I do this? Even if I create a 401(k) after I retire and then, several year later, want to combine these? Can I pull the 401(k) into TSP? A: Yes, yes and yes. — Mike Miles