Browsing: age

Q. I am a federal employee who will be retiring Jan. 3 after 40 years of service at age 58½. I took a necessary loan on my Thrift Savings Plan and will still have a balance on my loan when I retire. I understand I have 90 days to pay back the loan or I will be taxed for the money owed. I do not need my TSP money now. I would like to keep it there or invest somehow, not sure yet. I do not want to pay the money back, which makes no sense to me since I can take…

Q. I will be 56 this month and have 27 years of federal service. I plan to retire in February. Will I be able to draw an immediate monthly income from my Thrift Savings Plan upon retirement without incurring the 10 percent penalty for early withdrawal? A. Yes.

Q. I am a 60-year-old FERS employee and have decided to retire in March. With $250,000 in my Thrift Savings Plan, I am being courted by insurance companies to buy into their annuities. I can see some benefit but am worried that the administrative fees will take too much of my money. How can I overcome these anxieties? A. If history has taught us anything, it’s that these “financial services” companies don’t care about you and your interests. They care about profits, which always come at their customers’ expense. They’ll do and say anything they think they can get away with to confiscate your money.…

Q. I am retired and turn 70 this month. Even though I do not want to begin distribution of my Thrift Savings Plan investment, I understand that by law I must select a required minimum distribution program. My dependent spouse is 76 and also retired. I am healthy and, with my family genetics, could expect to live to age 100. I do not need the TSP to live on and want to maintain it in the TSP investment form for as long as possible. Under these circumstances, what is the best RMD to select: a life annuity or a TSP monthly payment? Should it be…

Q. Has there been any analysis over the cost/benefit of drawing Social Security at age 62, banking the money in a conservative investment instrument such as T-bills and drawing down on it at age 70 along with the reduced SSA amount using a 20-year amortization rate? A. There has been much analysis done on the timing of claiming Social Security benefit. I analyze the options for every one of my clients who haven’t already made the choice. You didn’t ask, but I’ll assure you that there is no universal result to this analysis. What will work best for you depends…

Q. I am 58½ and a federal employee. Can I take all or part of my Thrift Savings Plan and move it to a self-directed IRA? Or do I have to wait until I am 59½? How much tax will I have to pay on this? A. You may not take an in-service withdrawal for rollover to an IRA until you reach age 59½.

Q. Why do the Thrift Savings Plan publications say age 59½ is the earliest someone can receive TSP monies without a penalty, yet I read in your responses to questions that as long as someone retires in the year in which they reach 55 or later, there’s no penalty? I heard someone else at work yesterday who plans on retiring under MRA+10 saying he has to wait until 59½ so he won’t incur a penalty. Why are there two different prevailing understandings? A. The standard rule applies the early withdrawal penalty to those who have not yet reached age 59½. There…

Q. As a current furloughed government employee, can I withdraw money from my IRA and not be taxed the additional 10 percent under the exception: being unemployed and paying for health insurance premiums? A. From IRS Publication 590: Even if you are under age 59½, you may not have to pay the 10 percent additional tax on distributions during the year that are not more than the amount you paid during the year for medical insurance for yourself, your spouse and your dependents. You will not have to pay the tax on these amounts if all of the following conditions…

Q. My husband happens to be one of the 800,000 who got furloughed. I have an IRA of $3,400. Would I be able to cash that in without a penalty to get us by for, say, a month or so, depending on how long the furlough lasts? A. There is no exception to the early withdrawal penalty for a government furlough. You will be subject to the penalty unless you are age 59½ or meet one of the other exceptions to the penalty described in Internal Revenue Service Publication 590.

Q. I have two Thrift Savings Plan accounts — one with the military and one civilian. Because of my financial situation, I would like to take some money out for debt consolidation. I was weighing the option of borrowing from my civilian vs. closing my military account (which I am no longer contributing to) and using those funds. If I close my military account, can I roll a portion of it over to my civilian account, and use the rest? What/how much of a tax penalty am I looking at if I do either? Would it make sense to close my military…

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