If you own a Thrift Savings Plan account and plan to use it to fund your standard of living in retirement, you are a pension fund manager. As a pension fund manager, you are responsible for the standard of living your TSP account produces. This standard of living will depend heavily on the decisions you make in the course of managing your account. It is critical to recognize that a single stumble along the way — one bad outcome from one bad or overlooked decision — can cost you dearly later in life. The margin for error is razor thin,…
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Q. I have a 401(k), several CD IRAs and several mutual fund IRAs. I will turn 70 the end of November. Do I have to withdraw a minimum amount from each account, or can I withdraw the required minimum amount from one of the accounts as long as it totals the amount I must withdraw next year?
Q. Based on a reading of Internal Revenue Service Publication 721, it appears to say that since the CSRS and FERS retirement systems are considered “eligible retirement plans” you could roll over a distribution (including a regular annuity payment) into another IRA and defer the taxes, or into a Roth IRA and pay the taxes immediately. If this is the case, the normal IRS limitation on contributions to IRAs and Roth IRAs are bypassed. Am I reading this correctly? A. From IRS Publication 721: “Distributions eligible for rollover treatment. If you receive a refund of your CSRS or FERS contributions when you…
Q. If I leave my money in the Thrift Savings Plan, will I be penalized? Is it correct to say that I have the option of rolling it into an IRA or withdrawing all of it or part of it? A. You may leave your money in the TSP until the IRS minimum distribution requirements begin. The TSP does not penalize you for leaving your money there.
Q. I am about to divorce my husband, who works for the Federal Aviation Administration. 1. Can I keep his health insurance as an individual? Does this cost anything to him? How much will it cost me? 2. How can I be eligible for his life insurance after divorce? 3. Which is more beneficial: Getting a survivor benefit or getting a higher pension? 4. When can he start taking money from his Thrift Savings Plan? A. You can’t withdraw money from his TSP account. Your divorce settlement will govern how the TSP is divided and distributed and you’ll likely wind…
Q. What types of funds can be used to buy back military service time (nonqualified, qualified, Thrift Savings Plan account funds, IRA funds)? A. Only after-tax money can be used, so you can’t use TSP, IRA or 401(k) money for this unless you withdraw it and pay the tax bill first.
Q. Should I keep my money in the Thrift Savings Plan after I retire or put it in an IRA? What would be best to make the most interest? A. Stick with the TSP. You can’t beat the G Fund for risk-free interest.
Q. I am 66 years old and plan to retire in 2014, at which time I would transfer (convert) my Voluntary Contributions Program monies directly into a newly created Roth IRA. However, I have an existing (non-TSP) Traditional (substantial) IRA (never taxed), and know the Internal Revenue Service will aggregate my Traditional IRA balance for purposes of determining the taxability of this VCP-to-Roth conversion. If, prior to retirement, I (in 2013) transfer (direct rollover) my Traditional IRA into my existing Thrift Savings Plan account, will those monies now be considered 401(a), and therefore, making my subsequent VCP-to-Roth conversion occur with…
Q. Can you elaborate more on the “Ask the Experts” answer at http://blogs.federaltimes.com/federal-money/2011/02/16/rolling-a-portion-of-tsp-balance-into-self-directed-ira/. The answer seems to imply that under some circumstances, Thrift Savings Plan funds can be rolled over into self-directed IRAs. Can you explain the circumstances under which it’s legal, and can you provide references? I’d like to create a self-directed IRA for my husband, who is 45 years old and no longer in federal service, and then use the funds to purchase a rental property, with the monthly rents going directly into the IRA. A. Rollovers are allowed for TSP participants who are no longer federal employees or…
Q. I am a letter carrier, age 52, started in 1985 and have 28 years of creditable service. If I understand what I’ve gleaned from the posts here and the Postal Service were to offer me a Voluntary Early Retirement Authority this year, 1. Would I begin my annuity immediately? 2. Would I have no reductions in calculations of my annuity? (average high-3 x 1 percent x 28) 3. Would I receive credit for half of my sick leave and all of my annual leave? (How are these applied?) 4. Would I receive the special retirement supplement beginning at age…