Browsing: early retirement

Increasing monthly TSP contributions

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Q. I am a GS-04, Step 10. My account balance as of Dec. 31 would provide me with a lifetime Thrift Savings Plan monthly amount of $451. As of this time, I contribute $300 every pay period to TSP. Let’s say my goal is to have a lifetime TSP monthly amount of $1,000. By how much would I have to increase my TSP amount each pay period? I am 52 years old. I am under FERS. If I was offered an early retirement, should I take it? Or should take the chance of getting furloughed for an uncertain amount of time? A. Unfortunately,…

Roth vs. TSP for early retirement

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Q. I am 55 with 13 years of service. My wife is three years younger than me and will work three additional years — until I am 65. My Thrift Savings Plan balance is approximately $200,000, and I hope to retire at 62. My wife and I have other investments of approximately $300,000, totaling $500,000 (mostly 401(k), but approximately 20 percent Roth). I understand that when I am retired and after we reach the “threshold,” I will pay one of every two dollars made. Is this true for dollars dispersed from Roth accounts? I understood them to be “tax-free.” A.…

TSP contributions

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Q. I have been contributing to the Thrift Savings Plan for a number of years. I am a GS-4. I will have 28 years of federal service in June. In the beginning, I started contributing $10 (twice a year), then $25 (a year). Beginning last May, I started contributing $50 to the TSP out of my paycheck each pay period. At this time, I have no plans on retiring. I was hired under FERS. However, with furloughs, cutbacks and early retirements, should I keep increasing my TSP by $50 each year, or should I increase it by either $75 or $100? A. You should contribute…

Early retirement and IRA

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Q. I will be retiring Jan. 31 from the Postal Service. In May, I will receive $10,000 and in May 2014, I will receive $5,000. Can this compensation be used to fund an IRA in years 2013 and 2014 even though I will be retired and not working another job? Is this considered earned income? I know federal and state tax will be deducted. I don’t know yet if Social Security will be deducted, too. What are your thoughts on this? A. I believe that these payments are considered retirement income, and, therefore are not considered the basis for IRA contributions, but you should consult…

Voluntary contribution

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Q. Can I make a voluntary contribution and roll it over to a Roth IRA as a retiree? Am I correct that this would have to have been done before retirement? I took a voluntary early pension in 2004 at age 50. A. You are correct in that you may not make a VC after you retire.

TSP annuity options for Postal Service early-out

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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…

Buyout questions

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Q. I qualify for a buyout with 25-plus years of service. If I take the buyout, it is my understanding that I must wait until my normal minimum retirement age of 56 to begin receiving the Social Security supplement. Would this prevent me from receiving increases in Social Security supplemental benefits that I would have received had I waited until 56 to retire? I believe I would get the increases at 62, in any event, when I could first draw reduced SS benefits. Also, what happens to my Thrift Savings Plan account? May I purchase an immediate annuity and/or take a…

Correction

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Q. I am confused by your statement May 29 that the postmaster who is considering “early retirement”  after 24 years would be subject to a TSP early withdrawal penalty. My understanding is that if one is 55 years of age and retires, he/she can access his/her TSP funds without a penalty. Because this person is 55½, he or she would not be subject to a penalty. The authority you cite on page 7 appears to support my understanding. Have I misread your thoughts here as written? A. You’re right. Thanks for bringing this to my attention. There was a typo in…

Tax withholdings and TSP withdrawal

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Q. I will be taking the early-out in July. I have been a postmaster for 24 years, and I am 55½ years old. I have plans to withdraw my Thrift Savings Plan. Will there be any penalties, and will taxes be taken out? A. There will be penalty for early withdrawal. You’ll find the tax withholding requirements on Page 3 of this notice: https://www.tsp.gov/PDF/formspubs/tsp-536.pdf.

Early-outs

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Q. I will have 25 years of service soon but will only be 48. If the government offers early-outs, what will I be eligible for? Pension at one-quarter of my salary for the last three years? Health insurance? What if I get a part-time job? Will this affect my pension or annuity? Also, if I do an annuity on my Thrift Savings Plan, can I start that now? Will there be a penalty? Do I get this same amount for the rest of my life, or does it stop after a certain number of years? A. Reg Jones: Because you…