Q. I’m considering the Postal Service incentive currently being offered. I would like to withdraw my money when I turn 59½ in November, then pay the fed tax. Where could I invest the remaining balance and draw a small annuity? A. After you withdraw it and pay the tax, you can invest the money anywhere you like and use some or all of it to purchase an annuity from an insurance company. But why wouldn’t you leave it in the Thrift Savings Plan? You won’t find a better place to invest for retirement income anywhere.
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Q. I am a 55-year-old Veterans Affairs Department firefighter covered under CSRS with 35 years of service. I am planning on retirement next year. What are my options with my Thrift Savings Plan account when I retire? Can I withdraw funds for college without a penalty? Can I withdraw funds and transfer into a new IRA without penalty? Do I only have one time to decide what to do with these funds once I retire — withdraw all and reinvest or take a monthly annuity? A. Since you are retiring during or after the calendar year in which you reached…
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…
Q. I’ve been doing some estimates for retirement with the TSP calculator. I plan on leaving my money in G Fund after retirement, and for interest, I’ve been putting 3 percent. Is that a conservative enough amount? A. The calculator is unrealistic in that: 1. It assumes that a constant rate of investment return will be earned each and every year, like clockwork; 2. You can predict what this rate will be; 3. You know how long you’re going to live; 4. Inflation isn’t a factor. Each of these assumptions is absurd. I think that the calculator is, at best,…
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 began putting money in the L2030 in 2008 and didn’t really start to pay attention to it until mid-2011. When I noticed I had about $30,000 in it, I didn’t want to lose it to the current volatility. So I put it all in the G Fund and then the market started to increase. Does it make sense to go back to the L2030 since share price has increased $2.80 per share from when I left it, or is it better to wait until the price is closer to when I left it? I think I will just…
Q. On several occasions, you have stated that taking your Voluntary Contributions account as additional annuity (which pays about 7 percent to 8 percent depending on age) is not such a good deal compared to investing the money and taking the investment earnings. But would you say that it is a very good deal compared to using the account to purchase an annuity from an insurance company which pays way less than 7 percent to 8 percent (say 3 percent)? A. It would depend upon the specifics of the annuity you’re considering and your circumstances. It’s impossible to give a…
Q: I’ve been a federal firefighter for over 10 years. Our retirement is forced at age 57. According to my last TSP balance, I have just over $60,000. Not much considering 10 years worth of contributing. Doing the math and adjusting for economy, in another 10 years, I will have less than $120,000 for 20 years of service for retirement. How do I know I’m putting my funds in the right retirement fund? Right now, I have 100 percent going into the L2030 with 100 percent of future allocations going in the same. I just know I’m missing out on…
Q. I would like to know if there are any options to remove any portion of Thrift Savings Plan balance (e.g., my own contributions), prior to separation, retirement or a disability. I do not want to leave government service, nor am I eligible to retire. But I would like to control my own investment choices and am willing to consider paying an early penalty and taxes to withdraw the funds. A. If you are at least age 59½, you may take one age-based, in-service withdrawal. If not, you may not withdraw or roll over your TSP assets unless you can prove…
Q: I am 27 and I’ve been in the federal service for five years. All my contributions to the TSP are in the L2040. Since I do not expect to retire before 2040, I think the smartest move should be investing in the new L2050 fund. But my question is, should I move all the money that I already have to that fund, or should I just start investing in the L2050 and leave whatever I have in the L2040? A: The TSP recommends that you invest all of your account assets in the L Fund that corresponds most closely…