Q: I must withdraw (roll over) my TSP account beginning Feb. 25. Can I withdraw the funds to refinance my home? Would this use of my funds result in a higher tax liability than if I rolled over the funds into an investment fund? A: All funds distributions from the TSP are taxable unless they are considered a loan, or rolled over to another tax-deferred retirement account, such as an IRA. It doesn’t matter what you use the funds for. A Required Minimum Distribution may not be rolled over and must be included in your taxable income for the year.…
Browsing: IRA
Q: I retired on April 30 and rolled my 401(k) into a traditional IRA. I also turned 74 on April 30. When must I begin withdrawing from my IRA? A: You must begin taking withdrawals this year.
Q. I worked for the government for three years a long time ago and returned recently. I will be eligible to retire at age 62 in about three years. I plan to work until 67, if possible. Should I roll over the 401k funds that I have collected into the FERS system? What are the advantages and disadvantages? A. The TSP offers what is, in the opinion of many independent experts, the best retirement investment vehicle available anywhere. It offers low cost, ample diversification options, convenient management and the unique G Fund. I generally recommend that my clients move as…
Q. What are the advantages of moving my entire TSP into an IRA when I retire? A. The only good reason is that you MUST withdraw the money in ways not permitted by the TSP – multiple lump sums, for example. I regularly counsel my clients to leave their money in the TSP as long as possible.
Q. You suggest in one of your responses that you can move funds from your IRA to the TSP. What are the limitations and rationale for doing so? A. The money must be all pretax money – no nondeductible contributions. The rationale is that you will enjoy fully diversified, nonoverlapping investment funds at ultra-low cost, and the G Fund. Using these funds will enable you to implement an investment strategy that will produce superior risk-adjusted expected rates of return.
Q. It is my understanding that it takes 31 days after retirement date (this Nov. 30) for your TSP to be processed. What happens if, due to the process time, you don’t have time to meet the 60-day rollover? It is also my understanding that after age 55 up to 70 1/2, you can take out any amount you need as long as you pay the tax owed. However, once you start taking, will this be used to meet the RMI for all your total IRA no matter which one you take from. A. The 60-day rollover window starts from…
Q. I am currently employed and have the option of receiving a lump-sum payment for my pension payout. I would need to roll that over into an account that I could receive a monthly payment from. Do you have any advice as to what kind of plan would be available for me to do that? A. A Roth IRA or an IRA are possibilities. You should consult a planner or tax accountant to figure out which solution is right for you.
Q. While I know it’s not the smartest thing to “put all of your eggs in one basket,” I do have some questions. I began working for the U.S. government in May 2005. I plan to have my entire career in the federal service. Currently, my Thrift Savings Plan account is 100% percent invested in the L 2040 fund. In that time, my contributions and matching funds have grown substantially. But, I also have a rollover IRA from a 401(k) that I had while I worked in private industry. This rollover IRA has not grown much, and I have not…
Q. I am in the process of transferring my IRA account from my bank to my Thrift Savings Plan account. The majority of my IRA is from old 401k rollovers from previous jobs (pretax). However, there were a few years when I made contributions to my IRA with after-tax money through my broker. I’ve had my IRA for years now and have no idea how much or what portion of it is after-tax money as my broker has made many trades over the years. How can I determine exactly how much of my IRA is pr-tax and how much is…
Q. I plan to take an early out (Voluntary Early Retirement Authority/Voluntary Separation Incentive Pay) effective Aug. 31, 2011. I am under the Federal Employees Retirement System plan. At the time of my retirement, I will be 54 years old. I have read that if you retire before age 55, your withdrawal/rollover is subject to a 10 percent penalty. I have also read that any action can be postponed, but postponed to what age? 55 or 59.5? Does this mean I cannot withdraw and/or roll over to an Individual Retirement Account until I reach age 59.5? I don’t understand why I would have…