Q. I’m CSRS. If I deposit funds in my Voluntary Contributions Program, I thought I could only transfer interest gain to TSP. Can I transfer the whole amount if I choose Roth TSP? A. You may not transfer or convert money into the Roth TSP. You could roll the money over to a Roth IRA, however.
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Q. I want to help my daughter reduce her $120,000 graduate student loan, which she will repay at 6.5 percent interest when she finishes next year. I am 58 years old, a foreign service officer, and planning to work until I am 65. Given that Thrift Savings Plan general loans are at 1.2 percent interest, I am considering asking for a $50,000 loan to help my kid jump-start payments. In your opinion, would this be wise? A. Wise is not really the issue here. It’s certainly generous. But, is it affordable? That’s really the question.
Q. I am 60½ years old, under FERS and plan to continue to work until 66. I took out a loan from the Thrift Savings Plan and currently have payments for two more years. I am wondering if I could not pay this loan off and have it counted as a disbursement since I am old enough to withdraw from my account. I would not do this until 2013. A. Yes, if you default on your loan repayment, the TSP will declare your unpaid balance, including interest, a taxable distribution and the usual rules will apply.
Q. I just discovered that my contributions to the Thrift Savings Plan don’t show up there until seven to 10 days after I’m paid, but that money doesn’t sit in my bank account all that time. Do you have any idea where that money goes for that time? Is the TSP earning interest on it? If so, does that interest get deposited in our accounts, or does the TSP get to keep it and put it toward administrative costs? At the speed money can move these days, I find it hard to believe it takes seven to 10 days to get…
Q. I am a federal civilian with 20 years of service (12 to 15 years to go). I have more than $200,000 in my 401(k) plan. The new Roth IRA option sounds appealing to me, since I’d rather pay tax on my retirement money now, while I’m employed. If I start changing some of my biweekly allocations to the Roth option, am I negating the benefits of the Roth by contributing less to the “big pot” of my existing 401(k), reducing the compounding interest? I don’t want to end up robbing Peter to pay Paul. A. Directing your contributions to…
Q. I am planning on retiring in December, but I will still have outstanding balances owed on my Thrift Savings Plan loans. Will they take that remainder out of my TSP money when I withdraw it? A. If you retire with an outstanding loan balance, the unpaid balance, plus interest, will be declared a taxable distribution. This money has already been deducted from your TSP balance, so it won’t be available for withdrawal if it has not been repaid.
Q. I am leaving my career-conditional federal service for a job in private industry after just over three years. The value of the account is rather small, but I was able to vest for the match. I have not ruled out returning to the service at a later time because I am still in my early 20s. If I were to take the cash option and then subsequently wish to re-enroll in the Thrift Savings Plan in the event I become federal again, would I have to repay this amount plus any interest that would have accrued to get back in…
Q. With regard to a Thrift Savings Plan loan, it’s my understanding that the funds borrowed are from my account (money I previously paid into my TSP account). Since I’m CSRS and the government doesn’t match any of my deposits, does the interest that I’d pay actually get paid back into my account? If not, why would I ever want to borrow my money, and then pay the interest back to some other entity? However, if the interest was paid back to my account, then I’d see no reason to not take out a loan. Furthermore, I’d see no reason to…
Q. If I take $40,000 for 15 years from TSP, using the calculator it shows that at the end of the 15 years, I would be paying $45,000. What happens if I pay it off in a year (for example, I come into some money, sell an investment property). Do I still pay that $5,000 in unpaid interest, or is the interest re-amortized to the current date of payoff? Basically, I need some extra money for a down payment on a new primary residence. If I take the loan over the 15 years, it is a very low payment ($112…
Q. I have resigned from my position with the federal government in order to attend graduate school effective in May and will have been employed for a year and 10 months. I realize I need to be employed for three years for TSP vesting requirements, and I will likely forfeit my automatic 1 percent agency contribution in May, but after grad school, I intend to return to work for the federal government. How does this work with vesting in this situation? Would I be returned the 1 percent agency contribution (plus interest?) upon working an additional year and two months…