Q: I am resigning from a not-for-profit and wish to roll over my 403(b) savings into another retirement savings plan. Would it be better to roll over to the FERS or into a self-directed IRA? What are the advantages and disadvantages of both alternatives? Is either one “un-doable” later if I change careers again? A: You can’t roll over your 403b account into FERS, but you can transfer it into a TSP account, if you have one. You can later roll your TSP balance into an IRA or another eligible employer sponsored plan if you like, but I’m not sure…
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Q: I’m a Federal Employees Retirement System retiree, 70 1/2 years old, and have been receiving fixed monthly payments from my Thrift Savings Plan account to cover my living expenses since my retirement in 2006. I will begin required minimum distributions this year and would like to know if the IRS will allow the amount of my annual TSP withdrawals that exceed my TSP yearly RMD to be credited against the RMD requirements due to start this year for the standard individual retirement accounts I hold from credit unions, banks, etc. A: Your RMD must be calculated separately for each…
Q: I am a 52-year-old law enforcement officer, 6(c) designation, and retired under the Federal Employees Retirement System this past year. Although I thought I had a good handle on this from your website, I am confused by a retirement guide an LEO put out indicating the following: “If you continue your agency employment at least one day into the calendar year of your 55th birthday, you may make unabated penalty-free withdrawals from your TSP account upon retirement. You cannot roll over your TSP and make penalty-free withdrawals at 55.” The first part indicates than an LEO must work until…
Q: I have five years of military service that I am considering applying to my federal retirement years. I have waited way to long to do this and am hoping I could use my Thrift Savings Plan monies to pay for the military service, similar to rolling over an individual retirement account. Is this possible? A: A rollover to the Federal Employees Retirement System or the Civil Service Retirement System for service is not allowed.
Q: Can I continue to contribute to my TSP after I retire? A: Only by transferring eligible IRA or other pre-tax retirement plan balances into your account.
Q: I am about to retire. I still have a balance due on a loan from my TSP. Can I take the balance due as taxable distribution? I have already taken a one-time distribution after I turned 60. Or, do I have to pay it off before I can roll it into an IRA? A: Your loan balance will be automatically declared a taxable distribution if you fail to repay it after you retire.
Q: Before joining the government civilian workforce, I worked as a government contractor and contributed to the company’s retirement plan. When I left the company as a contractor and joined the government, I had to take my retirement fund and roll it over into another investment firm. At that time I put the money into a Franklin Templeton FTB and T Rollover IRA account. It has now been 10 years and the initial investment has only increased by 30 percent. First, can I re-roll that money into my TSP account (which I believe I can), and secondly can it be used…
Q: The main — and probably only — reason I need to transfer my money from TSP to a regular IRA is that I’ll be able to make withdrawals as I wish or as needed. You always advise your readers to consult someone trustworthy to advise us before we do this. My question is, how do we determine who’s trustworthy? I’ve been approached by my bank, credit union, some investment companies, etc., but I just don’t know what questions to ask or what to look for, other than their fees. A: Unfortunately, it’s not easy. But, you can start by…
Q: I am a postal clerk. I am 51 and I put 10 percent into TSP. I have traditional IRA (American Funds Growth of America , Income Fund of America, High Income Trust and Capital Income Builder.) Their reports claim the return is a better rate of interest than an unmanaged S&P 500 fund. Management fees are 0.6 percent. Am I better off rolling this IRA into my TSP account? A: Yes. The TSP has lower expenses and a better expected risk/return profile than these managed funds. As their prospectus clearly states, their past performance claims are irrelevant to the…
Q: My wife, a federal employee, has a traditional IRA. Some of the contribution made to the IRA was with money that was considered a deduction when it was contributed, thus no taxes were paid on those contributions. Some of the contributions over the years were made with after tax money. She could not deduct those contributions because of our combined income. My wife would like to know if she can transfer the money from her IRA to her TSP? Can all the increase in the value of the IRA be transferred to the TSP, even if the increase occurred…