Q. I am a federal employee under CSRS and over the age of 50. I understand that the 2013 contribution limit for TSP is $17,500 plus an additional catch-up contribution of $5,500, for a total contribution limit of $23,000. My question concerns contributions also made to a Roth IRA account outside the Thrift Savings Plan. For the general public, I understand if you are under the Internal Revenue Service income limit, you can contribute $5,000 plus a $1,000 catch-up contribution to a Roth IRA. I am under this income limit. Therefore, can I contribute the $6,000 to my Roth IRA…
Browsing: IRS
Q. My question regards Required Minimum Distributions and how this Internal Revenue System rule relates to an annuity purchased with IRA funds. If the annuity in question has fixed payment amounts that are less than a calculated RMD, the funds are not available to the account owner for distribution to meet the RMD rules. Does this scenario appear to be a credible reason for not meeting the RMD rules and an exception that IRS should allow? A. We don’t answer questions about IRAs here, but I will pretend you asked about the Thrift Savings Plan, since the answer is the same…
Q. I’m trying to understand why the Thrift Savings Plan calculator that allows “monthly” or “lifetime” projections automatically defaults to the required minimum distribution amount at age 70½ when my (expected) withdrawals are more than the Internal Revenue Service RMD limit. Which takes precedence: the IRS RMD which produces a significantly smaller amount of TSP payout, or the amount I wish to take out? A. You must take at least the RMD amount each year to avoid a substantial penalty.
Q. What is the definition for the Thrift Savings Plan early distribution exclusion “made as a result of total and permanent disability”? Does this mean that a retired military member with a Veterans Affairs Department-certified disability who is under age 55 is excluded from the 10 percent early withdrawal penalty? Specifically, I would like to withdraw my TSP in full upon military retirement at age 42 and will most likely have a portion of VA-certified disability based on injuries sustained on active duty. What justification is needed to report to the Internal Revenue Service when you file your taxes? A. I…
Q. I retired from federal service last year. The Office of Personnel Management made a direct rollover of my Voluntary Contributions Program after-tax contributions to a Roth IRA, and a direct rollover of my interest earned on those contributions to my Thrift Savings Plan account. However, OPM will not issue 1099Rs documenting these two direct rollovers, forcing me to file Form 4852 “substitute for 1099-R” with my 2012 tax return. This form requires these two direct rollovers to be identified with a distribution code. Of course, the Internal Revenue Service instructions aren’t that clear about which code is appropriate for each direct rollover. It…
Q. I am 55 years old and in the process of obtaining Postal Service disability. I want to know the tax ramifications if I withdraw my Thrift Savings Plan at 55 after separating from service. I will have 24+ years in. I have $200,000 and want to make monthly payments, not based on life expectancy. I want to withdraw $1,000 a month at 55 for 25 years or so until it is depleted. Am I subject to any additional penalty taxes? I called TSP and the Internal Revenue Service and was told that because I am spreading the monthly payments over 10 years, they would…
Q. I have tried to understand the issue of the 70½ age thing and what should be done with my Thrift Savings Plan. Do I need to roll it over, or can I keep it where it is and have the minimum withdrawal done each year? Also, can I withdraw $10,000 at that time? I did a one-time withdrawal in 2008. Does this mean I cannot make another withdrawal when I am 70½? A. You may leave your money in the TSP for life, but you must take Required Minimum Distributions each year if you are no longer working and have…
Q. I am a single FERS employee. In 2012 and prior years, I have been able to contribute the maximum amount to my Thrift Savings Plan account to bring my adjustable gross income below the income phase-out limit to be able to contribute the maximum to a Roth IRA. However, in 2013, I believe my AGI will exceed the limit and I would like to take advantage of the Roth TSP option. If I contribute the maximum $17,500 to the Roth TSP, can I still invest in a traditional IRA? If so, can I take the IRA deduction even though I make…
Q. I recently asked to withdraw my Thrift Savings Plan account. I understand that they automatically withhold 20 percent of the balance. I live in Pennsylvania and was wondering if I will have to pay more taxes even though TSP withheld the legal limit of the 20 percent. I am trying to figure out if I should be expecting a bill from the Internal Revenue Service once I file my taxes for 2012. Maybe I’m overthinking this, but I’m trying to buy my first house and heard rumors that the money can be used for this without penalty. A. The 20 percent withholding…
Q. I am a 47-year-old air traffic controller. I have completed my 25 years of service and retired Dec. 29. I have been investing in the Thrift Savings Plan my entire career. I want to draw a monthly payment of $1,500. If I do this, is it considered an annuity which I can claim under 72(t)? Or would it be better to buy an annuity equaling the amount I need and let the rest ride until I am 59½? A. The rules for satisfying the 72(t) exception to the early withdrawal penalty are complex and strict, so you should be…