Q: Since I’m not allowed to deposit my lump-sum annual leave check into my Thrift Savings Plan account, where’s the next best place to put it? Will this amount be considered part of my 2010 income regardless? A: Generally, I prefer the following order for retirement savings deposits: TSP, deductable individual retirement account, Roth IRA, taxable brokerage account. Your income will be taxable in the year in which you constructively receive it.
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Q: I was in federal service for three years and contributed to the Thrift Savings Plan. I left federal service more than five years ago, but I still have money in my TSP account, all in the G Fund. It has grown over the past five years by several thousand dollars despite the fact that I have not put any money into the account in those five years. Is there a way I can contribute to TSP even though I am no longer in federal service and have not contributed any money to the fund recently? A: Yes, you can…
Q: I am a rehired federal annuitant. Am I eligible for a deductible IRA? A: That will depend upon your age, marital status, whether or not you or your spouse are covered by an employer-sponsored retirement plan, and your income. Check IRS Publication 590, consult a tax adviser or use one of the many IRA eligibility calculators available online.
Q. I am a rehired federal annuitant. Am I eligible for a deductible IRA? A. That will depend upon your age, marital status, whether or not you or your spouse are covered by an employer-sponsored retirement plan and your income. Check IRS Publication 590, consult a tax advisor or run one of the many IRA eligibility calculators available online.
Q. I work for the FBI and belong to the CSRS. I’ve managed to put some money aside in a voluntary contributions account. I’ve heard that it is now possible to transfer the entire amount from the VC account into a private Roth IRA account. I’ve set up a brokerage account at USAA for the money, but no one at the Office of Personnel Management seems to be able to advise me if there are tax implications in moving the money, or if the money has to be moved by Dec. 31. A. OPM will not give you tax advice.…
Q: I will be retiring at the end of March 2011. I plan to roll over my TSP to an IRA. Can I roll it over before I retire? If not, how long does it takes to roll over to an IRA after I submit the form? A: If you have reached 59 1/2 and have not already done so, you may take an in-service withdrawal and roll it over to an IRA. Otherwise, you will have to wait until you retire to roll over your account. I can’t tell you exactly how long the process will take, but I…
Q: I am a federal employee with $60,000 in my nondeductible individual retirement account. I plan to convert it to a Roth IRA this year. I also have $120,000 in my traditional IRA which I do not plan to convert to Roth this year. To avoid the Roth conversion aggregation rule, my plan is to roll the $120,000 into my Thrift Savings Plan account before converting my nondeductible account to a Roth IRA. This way, the $120,000 will not be subject to the Roth conversion aggregation rule this year. Is this a valid way to avoid the rule? A: I…
Q: I’ve recently received a civil service deposit account statement and have two questions regarding payment. I am planning on rolling over an IRA account for payment. My first question: Can you confirm that there are no tax penalties for rolling over an IRA to the Civil Service Retirement System (Redeposit)? These are the instructions I am planning on giving my IRA company: Make check payable to Office of Personnel Management. Indicate FBO [my name] and include the claim number in the memo. My second question: Do you expect that this will cause any delays in processing my payments? If…
Q: My wife and I are retiring from federal civil service on Sept. 30. We want to continue adding money to IRAs we had prior to our civil service careers. We will not be employed after leaving the federal government. Can you share the contribution amount we can make to an IRA annually? A: If you have no earned income, you can’t make IRA contributions.
Q: I am 58 years old and will turn 59 1/2 in March, at which point I will be able to empty my Thrift Savings Plan account without an early distribution penalty. However, I would like to access these funds now to pay for some of my son’s law school expenses. He is 30 years old and not a dependent. Is there any reason why I could not roll over some of my TSP funds into a traditional individual retirement account and then withdraw the funds from the IRA now so that I can use the money for the expenses…