Q. While still employed in the federal government, can I re-deposit the money I have withdrawn to an outside IRA back into the TSP prior to full retirement? A. You may transfer an eligible (contains no after-tax money) IRA balance into your TSP account at any time.
Q. My husband and I are 51. We will retire in about 10 years. How do we find the right financial advisor that will help us understand what we need for retirement, and what we need to do if we won’t have enough to meet our needs?
Q. My daughter is 20 and just entered the military, hopefully to make a career of it. She is contributing 10 percent to her traditional TSP and $25 per month to her Roth TSP. Her traditional TSP is fully invested in the G Fund (this was automatic and she didn’t know enough to change anything). Wouldn’t it be better for her to put the maximum amount she can afford into the Roth TSP before putting anything into the traditional? She will probably be making quite a bit more money when she retires than what she makes now. If not, what…
Q. I retired in December at age 60 under FERS and my TSP is in the L fund because I plan to start drawing down to supplement my pension. My plan is to withdraw 4 percent per year based on a rate of return of 4.46 percent. The amount of my account is $249,972, which has not been touched yet. I’ve sought the advice of several financial planners who have consistently advised me to roll over my account into a self-directed IRA due to the risk of interest/inflation’s effect on the bonds in the L portfolio, as well as the…
Q. My mother recently passed away and left me $30,000 from her traditional IRA. Can I transfer this to my TSP? Would there be any penalties or tax hits? A. Special distributions rules apply to a Beneficiary IRA account, and it is not eligible to be transferred into your TSP account.
Q. Since catch-up contributions must be renewed each year, is it possible to make non-payroll cash contributions? Or are all non-IRA rollovers required to be payroll contributions? A. You may not make direct contributions to your TSP account. The only way in is through payroll deferral or transfer from an eligible retirement account.
Q. Can you please provide a citation to your assertion that an annual leave payout is not considered earned income and cannot serve as the basis for IRA contributions? A. See the sections on what is, and what is not, compensation on Page 8 of IRS Publication 590. I believe it is considered deferred compensation, but in the end, how you should proceed is a question for your tax preparer.
Q. I plan on retiring with 31 years of service at age 57. I have both the Regular TSP and the Roth TSP. I plan to withdraw my Thrift Savings Plan in a single payment. Can I transfer 100 percent of the Regular TSP to a Traditional IRA, but take the Roth TSP funds as a direct withdrawal without penalty? A. I believe so, as long as you have held the Roth account for at least five years. You should consult a tax adviser for specific advice before you proceed.
Q. I have three IRA accounts and I turned 70 in March. Do I combine the three to figure the required withdrawal? What would the tax be if I do a lump-sum withdrawal from all three? A. You must obey the aggregations rules for calculating your IRA RMD spelled out in IRS Publication 590. The taxable portion of each withdrawal will be added to your tax return as ordinary income for the year, where the tax you owe on the withdrawal will be calculated. Whoever prepares your tax return for the year of the withdrawal is responsible for making sure…
Q. Can I take my money out of the TSP and pay the penalty? Is there any way to get all my money out without having to retire or quit? If so, can I then move it into another self-directed IRA? A. The only ways to remove money from your TSP account before reaching age 59-1/2 while you are still a federal employee are: a loan and/or an in-service financial-hardship withdrawal. Neither of these may be rolled into an IRA account.