Q: I plan to retire at 67 with 30 years of FERS postal service. My TSP has $262,000 now. It should be close to $300,000 when I retire. My wife is five years older than I am. We are both in very good health. I suggested buying a joint annuity with my daughter who would be 30 instead of her as the joint recipient because of her age. If I died first she would still receive $700/month from my daughter’s annuity and then the daughter would receive it after my wife died. Would this be a better bet than taking…
Browsing: FERS
Q: Under FERS, federal LEOs can retire at age 50 (IRS Publication 721). There is an exception to the 10 percent early withdrawal penalty from a TSP account for “qualified public safety employees” (IRS Publication 575). If I wanted to take money out of the TSP to pay off my house when I retire at age 50 and leave the rest in the plan until later, I would be subject to the 10 percent penalty for early distribution. I understand that the exception is not automatic, in that the TSP will put code “1” (early distribution) in box 7 (type…
Q: I am a FERS employee with the United States Postal Service. When I retire will I be permitted to withdraw the funds in my annuity, my TSP, my accrued vacation and sick leave to be reinvested into private accounts so they can be inherited by our children upon the deaths of myself and my spouse rather than be sucked back into the government’s coffers? If so what forms would that require? A: You may withdraw your TSP account balance immediately after you retire, although the vested amount is yours to keep and not at risk of being “sucked” back…
Q: I am 65 and plan to retire soon. I would like to stay in the TSP as a FERS retiree. However, the inability to withdraw money while taking a monthly distribution has me considering transferring to an IRA. Do you see any possibility that the TSP will change the inability to withdraw money as necessary while having monthly distributions? A: Of course it’s possible. If you decide to roll over your balance, you would be smart to try to duplicate, as closely as possible, the advantages of the TSP in your IRA account. That means using low-cost index funds…
Q: I am 52 years old with 27 years with the Postal Service (FERS). How would it affect me if I accepted the Voluntary Early Retirement Authority (VERA)? Would I get the Social Security Supplement upon acceptance, and how would it affect my TSP, as I would need to start withdrawing it immediately upon accepting the VERA? A: Under this scenario, your TSP funds will be subject to the early withdrawal rules until you reach age 59 1/2. You could avoid the early withdrawal penalty, however, by initiating a series of Substantially Equal Periodic Payments (SEPP) under IRS code section…
Q: I plan on retiring in 2015 from the Postal Service at the age of 56, with 31 years of service. I am FERS and will have about $400,000 in my Thrift Savings Plan account. Would it be wise to withdraw this money at the time of retirement to pay off my mortgage, son’s school loans and all remaining bills? This way, I will have no expenses and could live strictly off my Postal Service retirement and the Social Security Supplement. If I understand it correctly, I wouldn’t be charge a penalty because I would reach my minimum retirement age…
Q: I loaned money from FERS in 2010. Must I claim this on my income tax return? A: I suspect your question is about the TSP, but it’s not clear. TSP loans are not reported on your tax return.
Q: I am under the Federal Employees Retirement System and have money in the Thrift Savings Plan. I returned to government service after 16 years in the private sector (I was under the Civil Service Retirement System from 1975 to 1987 but was placed in FERS in 2004 when I returned). I have retirement accounts outside TSP, but I find TSP to be easy to manage. I have considered transferring my other 401(k) accounts into TSP, but I have also heard concerns that Congress may target TSP as a source of “revenue.” I will be considering retirement in the next…
Q: I’m a Federal Employees Retirement System employee and I am confused about what advantages there are to the payroll tax deduction reducing the contribution into Social Security from 6.2 percent to 4.2 percent in 2011 as part of a payroll tax holiday. Won’t I still need to pay 6.2 percent at the end of the year when I’m filing my taxes? And will it not also affect my Social Security? A: No, you won’t have to pay the difference at the end of the year. Right now, Social Security benefits are not indexed to the rate at which you…
Q. When we retire under federal law Enforcement and receive the Social Security Supplement under FERS, are Social Security and Medicare taxes withheld on our FERS annuity and supplement checks? A. No, they are not.