Q. I am on federal disability retirement. If I make more than 80 percent of my high-3, I lose my disability retirement. If I withdraw from my Thrift Savings Plan, does it count as earned income, and will it make my disability pension stop? A. No.
Browsing: income
Q. Are the distributions from my tax-deferred TSP account (not Roth TSP) taxed as ordinary income or capital gains when I start drawing the money out? A. Ordinary income.
Q. Are TSP lump-sum withdrawals considered earned income for the purposes of the earned income test for FERS disability retirement? A. TSP withdrawals are not considered earned income.
Q. I’m unsure of what to do with my Thrift Savings Plan account. I understand that I could leave it in the account as it is until I’m 70½. I can also make a full or partial withdrawal. Full withdrawal is not an option for me. A TSP life annuity (both single or joint life) option is based on life expectancy or until the money runs out. Also there is the TSP annuity vendor (MetLife) where I could get the annuity but money used to purchase this annuity goes to the insurance company if you die before it’s used up.…
Q. After I retire, I am planning to withdraw $4,000 per month from the Thrift Savings Plan and I am not claiming Social Security. How will Social Security taxes be paid for the TSP I withdraw? A. Social Security taxes can’t be paid from your TSP withdrawals since they are not considered earned income.
Q. I retired in 2011 and must start required minimum distributions soon. I understand taxation if the Thrift Savings Plan sends me fixed dollar payments or if TSP pays out based on life expectancy. But what if I have TSP buy an annuity with part of my TSP and I leave the balance in the TSP? How are taxes figured? A. Your annuity income will be taxable as ordinary income and you will be required to take RMD from the remaining TSP balance, which will also be taxed as ordinary income.
Q. I am almost 58 years old and retired from military/federal service after my 55th birthday. I would like to withdraw my Thrift Savings Plan now, in a lump sum. How much will I have to pay in penalties and taxes? A. You’ll be subject to 20 percent backup federal withholding, no early withdrawal penalty, and your tax liability will be determined when you file your tax return for the year of the withdrawal. The money you withdraw will be taxed as ordinary income, and the rate will depend upon your particulars.
Q. My husband is retired for seven years now and is 67 years old. So far, we haven’t needed to use this money. We are trying to keep our income below $70,000 per year to stay eligible for our state property tax freeze, which is a significant saving of $2,000 or more per year. 1. What percentage or dollar amount are we required to take out each year? 2. Did I read correctly on someone’s question that if we set up a 10-year timetable we do NOT have to pay taxes on that money? A. The required minimum distribution changes each year based…
The Thrift Savings Plan’s website, www.tsp.gov, has posted a new income calculator. Well, it’s not entirely new, it’s mostly just remodeled. Now, instead of going directly to the old monthly payment calculator or the annuity payment calculator, you must go through a wizard that automatically runs both and compares the results. As much as I like the TSP and have endorsed its use, I have to say that I find this effort to be misguided and disappointing. I can’t imagine how the cost-benefit analysis was run to produce a green light for expending participant’s resources on what is an entirely…
Q. I have been in FERS for 16 years. I have been in the Army Reserve for 21 and plan to stay in until after my FERS minimum retirement age (58). I have enough combat time to be eligible for early reserve retirement pay at 58. I have deployed to combat several times and receive a combat-related injury compensation from the Veterans Affairs Department. I have a FERS Thrift Savings Plan and a military member TSP. I am thinking of buying back four years of active-duty time toward my FERS retirement. I believe former President Bush signed a special combat-related compensation…