Q. I am considering retirement at 62 (FERS) but not collecting Social Security until my full retirement age of 66. I know that once you start withdrawing from your Thrift Savings Plan account, you must continue to make withdrawals each year. To bridge the time from 62 to 66, I’m thinking of taking funds from my IRA instead. If I start taking withdrawals at 62, can I stop taking withdrawals from my IRA at 66 when I start Social Security and then resume withdrawals at 70½? A. You’ve got the right idea, and it will work. You may start and…
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Q. I turn 70½ in April 2014. My required minimum distribution can be taken anytime during 2014. Is it calculated on the balance in my IRA for 2013 or 2014? If I take it in 2014, the year I turn 70½, will I also have an RMD taken out Dec. 31, 2014, on the balance in my IRA in 2014? Will I have two RMDs in 2014? A. Your RMD amount for each tax year is calculated for each account that is subject to the RMD, and is based on the preceding year’s ending account value.
Q. I am a CSRS Postal Service employee and plan to retire at the end of 2014, when I will be 55 years old with 38 years of service (including sick leave). After reading other answers, I understand that I can immediately withdraw funds from my Thrift Savings Plan without penalty but would like advice regarding those withdrawals. Considering that TSP withdrawals are subject to regular income taxation, is it beneficial to move the funds to an IRA? Would I avoid any tax? Other than future growth potential and smaller tax rate, is there any benefit to delaying withdrawals until later in…
Q. I am 58½ and a federal employee. Can I take all or part of my Thrift Savings Plan and move it to a self-directed IRA? Or do I have to wait until I am 59½? How much tax will I have to pay on this? A. You may not take an in-service withdrawal for rollover to an IRA until you reach age 59½.
Q. I have a variable annuity (mutual fund) with Western Reserve Life Assurance and it has been doing terribly for many years. I put $10,000 in it in 2001, and it’s only valued at $14, 500 now, 12 years later! My Thrift Savings Plan account is doing much better, and I would love to transfer or roll over this money into my TSP account. Can it be done, should I, and, if so, how? A. It may only be done if: 1. The annuity is an IRA or other Qualified Retirement Account; and 2. All of the money it contains…
Q. I will turn 70½ next year and understand I need to take withdrawals from my retirement accounts. Can I add all of my accounts together — IRA and Thrift Savings Plan — compute the required minimum distribution, and then withdraw from one account which is not doing as well as the others, as I can if I have only IRAs? I want to withdraw my entire minimum from one IRA. Or must I take a minimum withdrawal from my TSP separately from my IRAs? A. You must compute the required minimum distribution for each account separately, but you may…
Q. I retired from the Postal Service on Jan. 31 with a Voluntary Separation Incentive Pay of $15,000. The VSIP was paid out as $10,000 this year and $5,000 in 2014. I know I can contribute to an IRA for 2013 since I had earned income during the month of January. Now that I’m retired, will I still be able to contribute to an IRA in 2014 because of the $5,000 in “income” that I’ll receive from the Postal Service? A. A VSIP is not considered a basis for contribution to an IRA.
Q. As a current furloughed government employee, can I withdraw money from my IRA and not be taxed the additional 10 percent under the exception: being unemployed and paying for health insurance premiums? A. From IRS Publication 590: Even if you are under age 59½, you may not have to pay the 10 percent additional tax on distributions during the year that are not more than the amount you paid during the year for medical insurance for yourself, your spouse and your dependents. You will not have to pay the tax on these amounts if all of the following conditions…
Q. My husband happens to be one of the 800,000 who got furloughed. I have an IRA of $3,400. Would I be able to cash that in without a penalty to get us by for, say, a month or so, depending on how long the furlough lasts? A. There is no exception to the early withdrawal penalty for a government furlough. You will be subject to the penalty unless you are age 59½ or meet one of the other exceptions to the penalty described in Internal Revenue Service Publication 590.
Q. I took the Voluntary Early Retirement Authority on Jan. 31 at my minimum retirement age. I had 26 years at the Postal Service under FERS. After 16 years of marriage, I became a widow. The only income I have is my annuity and the special retirement supplement from the Office of Personnel Management. Will I be eligible to receive Social Security benefits from husband at 60, and will they end at 62? When I turn 62, my supplement will end. I have $190,000 in the L2020 fund. Would it be beneficial to me to start receiving money from my…