Q: My wife retired in February. Our current plan is to take $50,000 from her Thrift Savings Plan to pay off some high-interest debt and leave the rest in the TSP to be invested into a monthly annuity. Is this allowed? Does she have options as to what annuity the money is invested in? Is their an option for a lump-sum survivor payment of the unpaid balance at the time of death? How does she proceed with implementing her final decision? A: She may take one partial withdrawal from her account, if she hasn’t already done so. She may also…
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Q: I will inherit approximately $40,000 because of the death of a family member. What is the best way to get this money into my Thrift Savings Plan account? A: If these funds are not already in a traditional individual retirement account or other eligible tax-deferred retirement plan account, you can’t add them directly to your TSP account. You could use these funds to support a higher regular contribution rate, if allowed, to your TSP or a traditional IRA. As long as the IRA contributions are tax-deductible, you can transfer the funds into your TSP account later.
Q: I realize that you can leave your funds in the Thrift Savings Plan until age 70 1/2. But can you continue to contribute to the plan in retirement? If so, how? Can you have a certain amount taken out of your retirement check? If not, what is the advantage of keeping the money in the plan? Wouldn’t it be better to take it out when you retire, reinvest it and continue to contribute to the new fund until you need the money? A: You can’t continue to contribute to the TSP after you separate from service. You can transfer…
Q. I am still employed by the federal government and am 63 years old. Am I permitted to transfer a portion of my TSP to an traditional IRA now, before I retire? I expect to retire in December. A. You may take a single age-based, in-service withdrawal and transfer or roll it over to an IRA.
Q. I have been retired from the Postal Service for about 10 years. I made a poor choice when I withdrew all my funds from the TSP. I have about $13,000 of it left in an IRA that is only earning about 1 percent. Is there a similar savings plan that one can invest in, in the private sector. That is a plan that has the various investment options, without the equal employer investment? A. Yes; an IRA at a discount broker using index funds similar to those available in the TSP. Simply transfer the assets from your current IRA…
Q: I have heard that my friends are having more taken out for federal tax on their IRA or annuity accounts. Mine remain the same. Does that mean I’ll owe money next April? I thought the Bush tax cuts were extended. A: Withholding and the actual tax you wind up owing are two different things. I can’t tell you whether you’ll owe money in April, but the more you contribute during the year, the less likely you are to have to pay later.
Q: My wife and I are retired from the Air Force. I am 50 and plan on working until I am at least 62 or 63 or until at least 65. How should I set up my TSP? A: Based on what little I know about you, and assuming that your TSP account is your only investment account, I suggest the following allocation: C = 45%, S = 20%, I = 25%, G = 3%, F = 7%.
Q: I plan to retire at 67 with 30 years of FERS postal service. My TSP has $262,000 now. It should be close to $300,000 when I retire. My wife is five years older than I am. We are both in very good health. I suggested buying a joint annuity with my daughter who would be 30 instead of her as the joint recipient because of her age. If I died first she would still receive $700/month from my daughter’s annuity and then the daughter would receive it after my wife died. Would this be a better bet than taking…
Q: I would like to take a portion of my TSP balance and transfer it to a self-directed IRA. What is the process for doing that? What are the estimated costs and penalties? A: In your circumstances — actively employed and younger than 59 1/2 — the TSP won’t allow this.
Q: I retired when I was 55 years and 10 months old in February 2008. I did a partial transfer of my TSP to IRAs. There is approximately $10,000 left in the TSP. Would I be subject to the 10 percent tax if I withdraw it all? I will be 59 1/2 in October 2011. A: No.