Q. I have an IRA that I would like to transfer to my Thrift Savings Plan account. The IRA contains both deductible and nondeductible funds. I understand that the nondeductible funds cannot be transferred to the TSP, but the deductible portion can. Is it as simple as transferring all but the nondeductible funds and their associated earnings? A. To the best of my knowledge, once you comingle the funds, they can’t be separated, but you might want to check with your tax preparer to be sure.
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Q. I am a single FERS employee. In 2012 and prior years, I have been able to contribute the maximum amount to my Thrift Savings Plan account to bring my adjustable gross income below the income phase-out limit to be able to contribute the maximum to a Roth IRA. However, in 2013, I believe my AGI will exceed the limit and I would like to take advantage of the Roth TSP option. If I contribute the maximum $17,500 to the Roth TSP, can I still invest in a traditional IRA? If so, can I take the IRA deduction even though I make…
Q. I will be retiring this year after 21 years in the Air Force. I have $20,000 in the Thrift Savings Plan and was wondering if it would be better to roll it over into an IRA or pay off all of my credit debt. How big of a hit would I take for withdrawing my TSP early? A. It’s impossible to say which is better without some careful planning and analysis. If you trigger the early withdrawal penalty on a TSP distribution, you’ll pay 10 percent of the earnings distributed.
Q. I am taking the Postal Service Voluntary Early Retirement Authority on Jan. 31. I’ll be 56 then. I’d like to take a full withdrawal from my Thrift Savings Plan in monthly payments and then possibly roll the balance into an IRA at age 59½. I understand that 20 percent will be withheld automatically from my monthly payments for taxes. If I withdraw the balance a few years later, will the 20 percent figure still apply, or can I roll it into the IRA without the tax hit?
Q. I’m a 52-year-old federal employee serving in military status. I have the following in my Thrift Savings Plan account: C Fund — $145,000; G Fund — $30,000; F Fund — $10,000; and I Fund — $7,000 for a total of $192,000. I have other IRA investments of $70,000. I plan to buy back about eight years of military service for my federal retirement. My risk level is somewhat moderate, and I wanted to know if I should move a percentage of my C Fund into G? The fiscal cliff concerns me. I’m not sure if I’m balanced in my…
Q. I was involuntarily separated under FERS discontinued service retirement with 26½ years of service. I was rehired to a federal job and opted to receive both salary and annuity. I no longer contribute to FERS and understand why I no longer get matching contributions to the Thrift Savings Plan, but why can’t I contribute my own money to TSP and get the tax deferral? I have a TSP account but do not plan on withdrawing money until I permanently retire in several years. A. The only way that you’re allowed to contribute to the TSP is through payroll deferral or…
Q. My husband and I inherited IRAs from my mother when she passed away at age 86. Why must I take required minimum distributions from these IRAs when I am only 59 years old and my husband is 46? A. Because the rules for beneficiary IRAs say you do. Or, you could not and pay the 50 percent penalty instead.
Q. I am a retired government worker who has contributed the maximum amount to the Thrift Savings Plan. After being retired for several years, I transferred the TSP to a traditional IRA. If I convert the traditional IRA to a Roth IRA, how do I figure my “basis” in the IRA to determine the amount that is taxable? A. If the only thing you ever put into the IRA was your traditional TSP assets, then the account has no tax basis and is all taxable upon distribution (or conversion). If you have contributed nondeductible or other after-tax money to the…
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…
Q. For about 10 years, I have been taking money out of my IRA using the Rule 72(t) with no issues. I am 58 years old and am planning to continue doing this well past when I turn 59½. Our daughter has some very high college expenses. I understand you can take funds out of an IRA to help pay for eligible college expenses (tuition, fees and books) along with room and board if the student is enrolled at least 12 credit hours. Can I take money out of my IRA for educational purposes while still taking money out using Rule…