Q. I’m eligible to retire CSRS Offset in a few months. I was considering a Thrift Savings Plan loan prior to retiring to pay off other bills. I understand that upon retirement/separation, I would receive a Form 1099 for taxable income. Is this something I should consider? A. If you don’t repay your outstanding loan balance within 90 days of separation from service, the amount due will be declared a taxable distribution and will be treated as though you took the money from your account on the date of the declaration. I believe that you should always consider all reasonable options when it…
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Q. How will Voluntary Early Retirement Authority/Voluntary Separation Incentive Pay affect my retirement benefits in regard to the Thrift Savings Plan and what I do with the money in the TSP (when do I have to take withdrawals, etc.)? I am a Defense Department civilian, age 53, with 35+ years of service under CSRS. A. Early retirement does not affect the rules governing access to your TSP account. The usual rules apply and they can be found at www.tsp.gov. In particular, you should understand the information contained in this notice: https://www.tsp.gov/PDF/formspubs/tsp-536.pdf. You’ll be subject to the early withdrawal penalty unless…
Q. I will be a 56-year-old CSRS employee with 33 years in service and 2,842 hours of sick leave. Since I contributed to the Thrift Savings Plan and plan on doing a one-time complete withdrawal, will I incur a large tax penalty? A. If you retire at age 56, you will not be subject to penalty for withdrawing money from your TSP account.
Q. I plan to retire in 22 months when I will be 62.1 years of age. I will retire in Virginia and immediately move to Texas. I estimate that I will be earning approximately $133,000 from CSRS, $6,900 from Social Security and $18,000 from Army retirement. I already have two properties in Texas and plan to buy my live-in home in San Antonio shortly after I arrive in Texas. I plan to cash in my Thrift Savings Plan at age 62 in Texas and use 100 percent of it as a down payment for the purchase of my home in San…
Q. I am 56 years old and just found out that I should be in CSRS Offset, not FERS. I’ve paid into my Thrift Savings Plan for more than 10 years. How does this affect my TSP contribution? A. If you are erroneously covered by FERS and you choose to move out of FERS, the Federal Erroneous Retirement Coverage Correction Act allows you to keep the employee contributions you made in your TSP account (plus the earnings attributable to your contributions) even if the contributions exceed 5 percent of the basic pay you earned for the pay period that contributions had…
Q. I know that you say (almost always) not to pay off the mortgage on retirement with Thrift Savings Plan funds. So when it is a good idea to do so? I’m CSRS Offset ending at GS-14, Step 8 with 32 years of service, $300,000 in TSP, $30,000 in cash on hand, will have no credit card or vehicle debt shortly as we are selling an investment property (taking the tax hit instead of identifying a new investment property because I really don’t want to be a landlord anymore), the usual monthly expenses, and will get the law enforcement/firefighter retirement benefit bump…
Q. I turned 70 years old in July and have been a CSRS retiree since 1997. I started the required minimum distributions in September 2012 from the Thrift Savings Plan and an IRA with DWS Scudder. Monies were invested in the G Fund with TSP and the DWS GNMA S Fund, which are very low risk. Before retirement, I felt more comfortable taking risk. I started withdrawing RMD only because I had to avoid penalty. My main concern at this stage in my life is to face as little risk as possible and to at least maintain my balance with minimum losses. My IRA…
Q. I am 56 years old and I work for the Department of Justice. I expect to retire in the next year under CSRS. I have approximately $300,000 in the Thrift Savings Plan. I would like to withdraw $100,000 when I retire at age 57 to pay off a mortgage, and keep the remaining funds in TSP until I am 70. Is there any way to withdraw $100,000 before I am 59½ without sustaining a tax penalty? A. Yes. If you separate from service during or after the calendar year in which you reach age 55, your TSP withdrawals will be…
Q. I have a Thrift Savings Plan account as a CSRS retiree. I also turned 70½ this year and have non-Roth IRAs. Can I take a distribution from one of the IRAs that will satisfy the required minimum distribution calculation for my TSP account and all non-Roth IRAs? If so, would I still have to take a distribution from my TSP account just because I turned 70½? A. According to the Internal Revenue Service rules, you should be able to satisfy your entire RMD requirement using one or more withdrawals from any covered account or accounts. The TSP will automatically distribute its…
Q. I am a 66-year-old CSRS retiree with approximately $200,000 in the F Fund. I have no debts, and will likely leave my Thrift Savings Plan untouched until I am forced to start withdrawing it. I am concerned that when interest rates start to rise, bonds will drop and the value of my TSP account may fall. I am considering moving my TSP into the G Fund. However, since I don’t plan on a withdrawal soon, should I put move it to one of the L funds? A. The G Fund is the only TSP fund that does not pose…