Q. I’m a recent federal retiree and was attempting to rollover my Thrift Savings Plan account to an IRA. I filled out the proper forms and had the financial institution where I’m rolling over the funds complete its section (Page 4), as well. I faxed the TSP withdrawal form as instructed. After a couple of weeks, I received a check (minus federal taxes) in the mail. I called the TSP hotline and they said that they received all of the pages of my form except for Page 4. They said that Page 4 was missing but the pages following Page 4 were…
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Q. I will retire April 30 under FERS (law enforcement agent; I will be 66½ years old) and have been exploring options available regarding my Thrift Savings Plan account. I read with interest your Feb. 4 Federal Times article “Don’t overlook TSP for lowest-cost investment” but have the following questions concerning what happens to my TSP account funds if I predecease my wife/heirs before or after the required minimum distribution takes effect. As the annuitant, upon reaching 70½, I would have 10 years to draw down my TSP funds. What happens if I predecease my wife/heirs during this time frame? It…
Q. I am a 53-year-old recent retiree (I was offered a Voluntary Early Retirement Authority through the Postal Service and accepted it). Is there a penalty to move my Thrift Savings Plan account to an immediate fixed annuity? If so, what would that penalty be? Additionally, I heard that within one year of retirement, my TSP account should be transferred to a civilian account (IRA, savings, etc.) What exactly is the time frame for that? A. The only penalty for using your TSP account to purchase an immediate fixed annuity in retirement is that you’ll be locking in historically low…
Q. According to a letter I received from the Thrift Savings Plan, I’d save in account management fees if I transfer traditional IRA to TSP. I don’t feel comfortable with this transfer. How would we know that the federal government won’t decide to use our funds, like they borrow Social Security funds, and then it won’t be there when we want it? What are your thoughts on this? A. What you’re worrying about is against the law. I think you are worrying needlessly. Your money is probably at greater risk in an IRA.
Q. I am over 50, my wife (unemployed) is under 49. In 2013, if I contribute the maximum amount (including catch-up) of $23,000 to my Roth TSP and traditional Thrift Savings Plan, can I also contribute the maximum of $6,000 to a Roth IRA or traditional IRA for a total contribution of $29,000? Can I also contribute the maximum of $5,000 for my wife into a Roth IRA or traditional IRA for a total contribution of $34,000, assuming that I fall within the adjusted gross income limits as addressed by the Internal Revenue Service? If there are limitations on contributing to a…
Q. My husband has a substantial sum in his private company’s 401(k). I am the beneficiary on this account. If he dies and the money goes to me, may I put that money into my Thrift Savings Program, since that money is all pretax? A. Good question! If it winds up in a 401(k) or IRA solely in your name (not in a beneficiary account), it is eligible to be moved into your TSP account.
Q. The Thrift Savings Plan allows contributions this year of $17,500 plus a $5,500 catch-up, whether to Roth or traditional IRA. Internal Revenue Service rules also allow (for certain income brackets) a Roth contribution of $5,000 plus $1,000 catch-up. Can a person over the age of 55 make the $6,000 Roth contribution allowed under IRS rules to a secondary Roth IRA and still make the difference ($13,000) in a contribution to the TSP? A. You are always free to make the full Roth TSP contribution. It’s your eligibility to make the Roth IRA contribution that may be limited, depending upon your tax…
Q. I appreciated your Feb. 4 article concerning the advantages of the Thrift Savings Plan vs. more costly private products. I am unclear, however, about the options (and their advisability) when it comes time to retire from federal service. Recognizing that rules allow distribution without penalty at 59½ and require some distribution from any IRA at 70, is continuation in the TSP an option which would allow the retiree to access the account as desired, or must the TSP account be moved to a private instrument? A. I have written about this topic on more than one occasion. You may…
Q. My question regards Required Minimum Distributions and how this Internal Revenue System rule relates to an annuity purchased with IRA funds. If the annuity in question has fixed payment amounts that are less than a calculated RMD, the funds are not available to the account owner for distribution to meet the RMD rules. Does this scenario appear to be a credible reason for not meeting the RMD rules and an exception that IRS should allow? A. We don’t answer questions about IRAs here, but I will pretend you asked about the Thrift Savings Plan, since the answer is the same…
Q. I retired from the federal service in 2012. I understand that I cannot make any further contributions to the Thrift Savings Plan since I am no longer a federal employee, and that I cannot undertake a traditional or Roth IRA in 2013 unless I have wages. What I am not clear about is the spousal IRA. It appears to me that because my spouse is still working, I could contribute to a traditional IRA in 2013 as a nonworking spouse if he and I met the income and joint filing qualifications. If this is true, could I then transfer that spousal IRA…