Q. I have 21 years of federal service including four years of military time. The redeposit is about $6,500. I will be eligible for Social Security at 62, and the reduction to my annuity will be about $250 a month. In your opinion, would it be advisable to take this money from my Thrift Savings Plan account to pay the redeposit? The break-even point is about 2½ years. What factors should I take into account? A. The answer depends upon what retirement system you’re under, whether or not you have dependents who will be relying on a survivor annuity, your tax…
Browsing: annuity
Q. I am a 47-year-old air traffic controller. I have completed my 25 years of service and retired Dec. 29. I have been investing in the Thrift Savings Plan my entire career. I want to draw a monthly payment of $1,500. If I do this, is it considered an annuity which I can claim under 72(t)? Or would it be better to buy an annuity equaling the amount I need and let the rest ride until I am 59½? A. The rules for satisfying the 72(t) exception to the early withdrawal penalty are complex and strict, so you should be…
Q. I was involuntarily separated under FERS discontinued service retirement with 26½ years of service. I was rehired to a federal job and opted to receive both salary and annuity. I no longer contribute to FERS and understand why I no longer get matching contributions to the Thrift Savings Plan, but why can’t I contribute my own money to TSP and get the tax deferral? I have a TSP account but do not plan on withdrawing money until I permanently retire in several years. A. The only way that you’re allowed to contribute to the TSP is through payroll deferral or…
Q. I am a U.S. Capitol Police officer. I plan to retire in 2014 at age 55, although I can stay until 57. If I convert my TSP funds to an annuity, will I be able to draw on it right away? If not, when? Will I be penalized prior to age 62? A. If you retire during or after the calendar year in which you reach age 55, you will be exempt from the early withdrawal penalty for all of your TSP assets as you withdraw them and may take them within the usual TSP limits, including using some or all…
Q. My husband and I are both retiring soon, he under FERS and me under CSRS. His income will be made up mostly of Social Security, while mine will be mostly CSRS. A full annuity for him would cost $425 a month. Does it make sense to elect this annuity given the cost? Would a term life insurance policy be a better alternative? I need to put the paperwork in this week. A. There is no universal answer to this question, but if in doubt, the safe bet is to elect the full survivor benefit for your spouse. To answer this question properly would take…
Q. I am a firefighter with a county fire department in Florida. As such, I am part of the Florida Retirement System in the special risk class. I started my career early and will be eligible for retirement with full benefits and no FRS penalties by age 48. (This is 25 years of service.) However, because of the Internal Revenue Service penalty for retiring before age 50, I would receive a 10 percent tax penalty in addition to the normal taxes I will pay on my retirement income. I understand that I will receive the penalty of 10 percent. However,…
Q. I involuntary separated from federal employment due to a reduction in force at age 53. I receive a small FERS monthly annuity. I am now 59½, and I would like to withdraw $25,000 from my Thrift Savings Plan, which I have never touched. I will have to pay taxes, but will this withdrawal be subject to the 10 percent penalty at my age? A. No.
Q. I will be taking the early-out offered by the Postal Service. I am a 54-year-old CSRS employee of 35 years. I have a Thrift Savings Plan account. Please give your opinion on the best option such as taking the MetLife annuity, joint with spouse, level or increasing, cash refund compared with simply leaving the money in TSP and getting monthly payments either by specific amounts or increasing by life expectancy. I don’t quite understand the difference in the two options. A. There is no “best” choice. Using your money buy an immediate annuity guarantees income for life. You give…
Q. I have a Thrift Savings Plan account, and I have a retirement annuity with a company other than MetLife from previous employment. Can the two be merged into the MetLife program, or do I have to take my TSP account to the other annuity when I retire? Am I correct in assuming that if I place my TSP either way, there will not be a tax penalty, since it will be put directly into an annuity? A. Merging the two is probably not possible. You can either continue your TSP account, use the money to buy a TSP annuity…
Q. I’m 60 years old and receiving a full Thrift Savings Plan annuity at set monthly payments. For 2013, I want to increase the payments using Form TSP 73 to cover anticipated expenses for a family wedding. The following year, I want to again submit TSP 73 to significantly lower my payment for 2014, as I will have some anticipated income and won’t need the extra money. Other than the $50 minimal monthly withdrawal amount, are there any dollar restrictions in setting the monthly withdrawal amounts year to year? A. Just to be clear, you are receiving automatic monthly payments from your…