Browsing: IRA

Q: My 2010 “annual” required minimum distribution from my Thrift Savings Plan will be approximately $8,500 (about $710 per month). My “monthly” withdrawals will be $2,000.00. If I roll over to a Roth IRA that part of my withdrawal that exceeds my required minimum distribution, can I start deposits to my IRA of $1,290 in January and each month after that, or do I have to wait until May, at which time my entire “annual” required minimum distribution will be met before I can make deposits to my Roth IRA? A: The limits are annual limits, so what matters is…

Q: After contributing $22,000, including age 50 catch-up contributions, in calendar year 2009, may I also contribute $6,000 to a traditional (nondeductable) IRA, which includes the standard $5,000 plus $1,000 age 50 catch-up? A: Your participation in the Thrift Savings Plan should not prohibit you from making the maximum nondeductible contributions to a traditional IRA in 2009.

Q: I will be retiring on Jan. 1. I recently contributed $50,000 to my Voluntary Contribution account. This is my first contribution to this account, and upon retirement I would like to transfer the entire balance directly to a Roth IRA. I have an existing Traditional IRA (never taxed and balance of approximately $65,000) and a Thrift Savings Plan account of approximately $245,000. My goal is to transfer the entire amount of my voluntary contibution directly to an existing Roth IRA upon retirement. My thought is that the only tax I would owe on this conversion would be the few…

This is my last Money Matters column for 2009, so I’ll take the opportunity to remind those of you who are still active federal employees to carefully plan your retirement savings contributions for the coming year. Unless there is a compelling reason to do otherwise, I strongly recommend you first direct your retirement savings contributions into your Thrift Savings Plan account — before you contribute to any other accounts. You should contribute the maximum allowed to your TSP account — which in 2010 is $16,500 if you are under age 50, or $22,000 if age 50 or older — before…

Q: Due to some less-than-intelligent decisions I made 10 years ago, I have a tax bill with the IRS for over $100,000. The only asset I have that would enable me to pay this bill is my Thrift Savings Plan. The IRS has put a levy on my wages and won’t discuss an offer in compromise because I have $280,000 in my TSP. I am 58 years old and didn’t plan on retiring until I turned 60. Can I liquidate my TSP, transfer the funds directly to a tax-deferred IRA and avoid the tax bite, but still liquidate enough funds…

Q: I am a 62-year-old federal employee who will retire in January 2010 under the Civil Service Retirement System. I have put after-tax money into the voluntary contributions (VC) program and plan upon retirement to roll the interest earned directly to my Thrift Savings Plan account and the after-tax contributions to a Roth IRA. I understand that the IRS says that the VC program is a Qualified Retirement Plan. Can the after-tax contributions can be rolled directly to a Roth IRA without paying taxes on the rollover? A: In general, it is possible to roll your VC balance into a…

Q: I have an IRA from a previous employer that is not performing too well. The Thrift Savings Plan seems to be rebounding rather nicely over the past several months. Should I move the IRA into the TSP? Can this be done without any penalties? A: The TSP is a better investment environment than any retail IRA account I have ever seen, and I generally recommend that eligible investors move their IRA money into the TSP whenever possible. You are eligible if your IRA account contains no after-tax money — money from non-deductible contributions. Check with your IRA custodian to…

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