Q: It seems to me that the CSRS voluntary contributions program is the undiscovered gem of the CSRS system. I have already heard that the VC program can be used as a way to beef up a Roth IRA. However, I think that in my case (age 67), retirement and use of the VC account for its intended purpose — to purchase additional annuity — is a very good deal, which according to my calculations would yield 8.46 percent for life (which includes a 10 percent reduction for my spouse survivor’s annuity, who is 65). Compare that rate to a…
Browsing: annuity
Q: If I take an age-based withdrawal before I retire, to pay off the house, and start monthly withdrawals from the balance of my TSP funds after I retire, will I be allowed to stop the payments at a later date and purchase an annuity? A: No, but you could roll the final payment from your account into an IRA and then buy a retail annuity from an insurance company from there.
Q: I have seen conflicting opinions on how the FERS annuity supplement is taxed at the federal level. Is it fully taxed, or is it taxed at 50 percent if your combined income is $32,000 to $44,000 and taxed at 85 percent if your income is $44,000? I start receiving the FERS supplement in June and I have to know how it’s taxed for next year’s tax filing. I retired under FERS. I get the supplement from my MRA of 56 years old until I’m 62 years old. A: It is taxed as if it were a Social Security benefit.…
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.
Q: My wife retired in February. Our current plan is to take $50,000 from her Thrift Savings Plan to pay off some high-interest debt and leave the rest in the TSP to be invested into a monthly annuity. Is this allowed? Does she have options as to what annuity the money is invested in? Is their an option for a lump-sum survivor payment of the unpaid balance at the time of death? How does she proceed with implementing her final decision? A: She may take one partial withdrawal from her account, if she hasn’t already done so. She may also…
Q: I saw the following comment in response to the question regarding the Thrift Savings Plan annuity rate being 3.625 percent: “The annuity rate is used to determine, at the time of purchase, the size of the payment you’ll receive in exchange for the annuity purchase price.” My question is surrounding the phrase “annuity purchase price.” Are you telling us that after all the years of contributing our own, hard-earned money into the TSP to secure a better retirement life for ourselves and our families, that we have to buy back that money from the TSP in order to use…
Q: I was reading a question submitted to you about the Thrift Savings Plan annuity rate being 3.625 percent. What does this rate have to with withdrawing from our accounts in retirement in the form of an annuity? If I have $200,000 in my account and buy an annuity with it, once it is purchased I get the monthly amount for the rest of my life, Right? I don’t understand what this annuity rate is for. A: The annuity rate is used to determine, at the time of purchase, the size of the payment you’ll receive in exchange for the…
Q: I am under the Federal Employees Retirement System and was looking at the Thrift Savings Plan annuity rate for April 2011, which is 3.625 percent. Using their calculator, at age 62 if I used $100,000 of my TSP to buy an annuity, it would pay $581 a month as long as I live. In order to get that out of the TSP, I’d have to earn 7 percent every year to be able to earn $583 a month! How is that so? Did I calculate something wrong? A: You’re forgetting to account for the fact that once you buy…
Q. My TSP question is based on an earlier answer you gave someone else: “A life annuity means that payments continue, on an accrual basis, until the annuitant’s death, unless a survivor benefit option is elected at the time of purchase.” When I die, are the funds remaining in my TSP inheritable by my adult child? If not, why should I leave it in the TSP not knowing when I will die? If yes, can the funds remaining in my TSP be rolled into an IRA or TSP that my adult child owns? A. If you use the funds in…
Q.I have heard that friends are having more taken out for federal tax on their IRA or annuity accounts. Mine did not. Does that mean I’ll owe money next April? I thought all the Bush tax cuts were extended. A. Withholding and the actual tax you wind up owing are two different things. I can’t tell you whether or not you’ll owe money in April, but the more you contribute during the year, the less likely you are to have to pay later.