Browsing: insurance

TSP annuity?

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Q. My father died with $90,000 in a Thrift Savings Plan annuity. How do I collect? A. There is no such thing as a “TSP annuity.” Your father used his TSP assets to buy an annuity from an insurance company. You’ll need to file your claim with the insurance company that issued the annuity contract and was making his payments.

Directed reassignment

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Q. I am 46 with 22 years of service, and have been told that I will soon receive a letter of directed reassignment to a job in my same grade far outside my commuting area. When the letter arrives, if I should decline to move to the new position, what are my options for drawing retirement? How about insurance? Severance pay? What about my 401(k) in the Thrift Savings Plan? My performance ratings are not an issue. A. Mike: Your circumstances will not affect the usual rules that apply to your TSP account. As long as you remain employed, you will be…

Paying insurance premiums

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Q. What factors determine whether it is better to pay insurance premiums with pretax dollars or waive that and pay with after-tax money? My thought is that by paying with after-tax money, taxable income is increased, thereby increasing the Social Security entitlement. How do you determine if that is more beneficial than the reduced tax liability now? A. The answer depends on your circumstances and a number of assumptions about the future. The issue is discussed on the Office of Personnel Management website at www.opm.gov/insure/archive/health/pretaxfehb/qanda/23.asp.

Roll TSP into IRA?

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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…

TSP and hackers

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Q. I am concerned about the stolen data from a TSP-contracted computer that’s been in the news recently. I know TSP is assuring everyone the information has not been used, and they are offering those affected a credit monitoring service for one year free. That does little to comfort me that the money in my Thrift Savings Plan (or IRAs in mutual fund companies elsewhere) is secure. Banks have FDIC. Savings and loans and credit unions also have insurance to protect depositors from theft. Is there anything out there we can rely on to assure reimbursement if our TSP or…

TSP withdrawal

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Q: If I take an age-based withdrawal before I retire, to pay off the house, and start monthly withdrawals from the balance of my TSP funds after I retire, will I be allowed to stop the payments at a later date and purchase an annuity? A: No, but you could roll the final payment from your account into an IRA and then buy a retail annuity from an insurance company from there.

Pension Max

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Q: What is Pension Max? Some people say it’s good while others say it’s not. I can’t seem to find any information on it. A: Pension Max is a term used to describe substituting a life insurance policy on a pensioner’s life for a pension survivor benefit. In the case of a federal annuitant, it’s a bad idea. It favors the pensioner at the expense of the survivor. Of course it pays off very well for the insurance agent who sells it to you.

Long-term vs. universal life insurance

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Q: At a recent retirement seminar I attended the speaker mentioned advantages to having a universal life policy that could be converted to a disability policy over paying for a long term care insurance policy. One of the advantages mentioned is the fact that any unused money would go to beneficiaries, whereas under a long-term policy you either use the money or it goes when you go. Why buy a long-term care policy when you can have this benefit? A: It costs more.

Life insurance

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Q: If I have five times my pay life insurance or any amount and I die, will there be taxes taken from the total paid out to my survivor? Or do they receive the full benefit? A: FEGLI benefits are paid tax-free.

Long-term insurance vs whole life

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Q: What can you tell me about the benefits (and drawbacks) of a universal life policy that can be converted to cover a disability compared to a long-term disability insurance policy? I found the idea that a beneficiary could receive death benefits appealing if one never uses or only used some small portion of the amount of the policy, rather than have all the funds placed into a long-term care disability plan just disappear upon your death. A: A general comparison is impossible since each policy is different. You are, however, buying and paying for what are effectively two insurance…

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