Q. I retired in April 2008 and took a lump-sum distribution from my Voluntary Contribution Plan, with the interest going into my Thrift Savings Plan and the principal amount going into my money market fund. Is it still possible to take the entire VCP principal amount and put it into a Roth IRA four years after retirement? When I attended various CSRS federal retirement seminars in 2007 and 2008, I was never informed of the option to transfer the principal amount to a Roth IRA. A. This is not possible.
Browsing: distribution
Q. I am retiring from the Army after 22 years of service and I am 45 yrs. old. Can I start withdrawing from the Thrift Savings Plan and avoid the early withdrawal penalty by taking a series of Substantially Equal Periodic Payments? How does that work? My life expectancy is 37.7 more years, according to the Internal Revenue Service, so is that the number of years my funds can be distributed? If so, do I then divide what I saved by 37.7 and again divide by 12 to see what my monthly payments would be? A. You may avoid the…
Q. I am a retired government worker who has contributed the maximum amount to the Thrift Savings Plan. After being retired for several years, I transferred the TSP to a traditional IRA. If I convert the traditional IRA to a Roth IRA, how do I figure my “basis” in the IRA to determine the amount that is taxable? A. If the only thing you ever put into the IRA was your traditional TSP assets, then the account has no tax basis and is all taxable upon distribution (or conversion). If you have contributed nondeductible or other after-tax money to the…
Q. In 2011, following 18 years of government service at age 60, my excepted service position ended unexpectedly. My retirement pension is small: $589. My first payment arrived February. I had $10,000 in savings with Fidelity but used that to live on, considering the lack of income for two to three months and basic living requirements: mortgage, insurance, car payments, son leaving for college, etc. I paid taxes on that money, approximately $3,000 or more. That money is now gone. When I retired, I had two Thrift Savings Plan loans that were rolled in as income on my taxes. They…
Q. Can a retiree withdraw money from the Thrift Savings Plan more than once? How many times? A. You are allowed one partial withdrawal and one full withdrawal per lifetime. The full withdrawal can be taken as a series of monthly payments, which you can terminate with a lump sum distribution of the remainder. The withdrawal limits are clearly explained at www.tsp.gov.
Q. I know that the Social Security supplement is reduced for any earnings above $14,640 (in fiscal year 2012). If I retire under FERS at my minimum retirement age but my wife keeps working at her job, will her earnings count toward that $14,640? Also, would distributions from my Thrift Savings Plan count toward it? A. Mike: Your TSP distributions do not count as earned income. Reg: The Social Security earnings limit applies only to your own earnings from wages and self-employment, not anything else.
Q. I am 63 years old, in FERS, have 25 years of service, and have worked for the same agency my entire government career. Because of medical conditions, I need to retire within the next two months. I have an outstanding $20,000 loan and will not be able to repay it before retirement. I have read a lot of what might happen: 10 percent penalty, etc. But could you explain what would be the best course of action and how the outstanding loan will be treated. I would like to use part of my Thrift Savings Plan for medical bills. A. If…
Q. On Oct. 10, 2009, you said that you could begin receiving fixed payments and switch to an annuity. On Nov. 8, 2010, you responded to a similar question with the opposite advice. I am trying to decide whether to take payments while hoping the providers’ rates improve or go to a fixed index annuity with another company. Is the decision to take payments in the Thrift Savings Plan irreversible? A. My Oct. 10, 2009, answer was incorrect. You may not end a series of automatic monthly payments with a TSP/MetLife annuity purchase. That option is only available when starting…
Q. I am 56 years old and plan on retiring in October with 35 years of service. I am a civil service employee. Can I make yearly withdrawals from my Thrift Savings Plan with only taxes to pay on it? Or would I be better off taking all of it out and putting it into a bank account? I will need it for the next three years to make my house payment? A. You may not make yearly withdrawals from your TSP, but you could move your money into the G Fund and then set up monthly payments that are…
Q. I am planning on retiring at age 56½. I am a CSRS employee. If I take my Thrift Savings Plan balance and roll it over to an IRA, can I start withdrawing it immediately, or do I have to wait until I am 59½ years old? A. The rules are different for IRAs than they are for the TSP. Under the scenario you propose, you will be exempt from the early withdrawal penalty for distributions taken from your TSP account because you retired during or after the year in which you will reach age 55. There is no similar…