Q: I am a Civil Service Retirement System retiree. What happens to my Thrift Savings Plan account after my death? My notes from a retirement seminar 10 years ago say that if my spouse is listed as my beneficiary, she may move my TSP funds into her individual retirement account with no tax or penalty. If my children are listed as beneficiaries they do not have the same option, and in most cases the TSP funds are fully taxable. Is this still correct? A: Your spouse may transfer the balance to an IRA and avoid current taxation or may, under…
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Q. Me: 55, married, retired military E-8, currently working federal civil service (WS-10 paygrade) since 1999. Wife: 62, Homemaker. All kids grown and on their own. I invest 15 percent into the TSP at work; have a traditional IRA from a previous job’s 401(k) rollover; and have a Roth that I have been investing $2,000 a year into for years. We recently paid off the home we bought in 1994, and now have additional money to invest into retirement. I want to max out my Roth to $6,000 annually, which is painless due to the mortgage being paid off. I’d…
Q. I’ve read the latest article from you, Mr. Miles and I have a question. I am a FERS/LEO employee and I max out my TSP contributions. Can I contribute to an outside brokerage IRA (I meet the Roth requirements) and if so, what is the cap for that yearly? A. Whether, or not, and how much you may contribute will depend upon your age, marital status, income and possibly other factors. Search the Internet for “IRA contribution calculators” and pick one from a reputable website to see where you stand — or check with a CPA.
Q. If I am 55 when I retire, I cannot access my traditional IRA without penalty until I reach 59 1/2. If I transfer the IRA into TSP, does that restriction no longer apply? In other words, can I transfer my IRA to TSP, retire at age 55, and withdraw the mingled funds from TSP without penalty? A. Yes, and in other words, yes
Q: Can you transfer (or rollover) money from your existing IRA to a CSRS Voluntary Contributions account? A: No.
Q: Can I transfer my old SEP-IRA into my existing TSP account? A: Yes, as long as it contains only pre-tax money.
Q: I am a 56-year-old FERS retiree who accepted the early out incentive agreement with the Postal Service in November of 2009 and have not worked since. Would the $5,000 incentive payment I am to receive in November 2010 be eligible for a $5,000 IRA contribution for tax year 2010? A: No.
Q: This is regarding the following question and answer — Q. If I have a traditional IRA worth $100,000 with a basis (post-tax contributions) of $20,000; can I roll over $80,000 to the Thrift Savings Plan and the other convert the other $20,000 to a Roth? Would these two actions result in a tax-free transaction? A. Yes, a special rule allows for this to be done. — is this your final answer? Please tell us what the special rule is. And if this is the final answer, can a retiree do this? I would contribute my pre-tax earnings in my…
Q: My husband and I want to convert all or a portion of our traditional IRAs to Roth IRAs in 2010. Our contributions have been nondeductible and our IRA accounts are about double the investments we have made (value versus basis). So, we will be paying tax on the earnings. Then I thought about our Thrift Savings Plan accounts. Are these considered IRAs for the purposes of this conversion opportunity? I read that the IRS will consider all IRAs; you can’t pick and choose among or within our IRA regarding the conversion, but I certainly would not want to have…
Q: My husband and I want to convert all or a portion of our traditional individual retirement accounts into Roth IRAs in 2010. Our contributions have been nondeductible, and our IRA accounts are about double the investments we have made (value versus basis). So, we will be paying tax on the earnings. Then I thought about our Thrift Savings Plans. Are these considered IRAs for the purposes of this conversion opportunity? I read that the IRS will consider all IRAs; you can’t pick and choose among or within our IRAs regarding the conversion, but I certainly would not want to…