Q. Will you be allowed to withdraw the principal (not the interest earned) from your Roth TSP account after the five-year seasoning period and without any retirement age restrictions? Do the Internal Revenue Service’s rules on Roth 401(k) or a Roth IRA apply to Roth TSP? A. The early withdrawal penalty covers Roth distributions prior to age 59½.
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Q. I will become a 49-year-old federal employee this August. I currently contribute the Internal Revenue Service maximum of $17,000 annually to the Thrift Savings Program via bi-weekly payroll deductions. I plan to begin making catch-up contributions Jan. 1, 2013. Once the Roth TSP is available, can I designate beginning Jan. 1, 2013 catch-up contributions to the Roth TSP while maintaining the IRS maximum contributions to the Traditional TSP? A. You may split your pay deferral, including your catch-up contributions, between the traditional and the Roth TSP accounts.
Q. I retired from the Department of the Interior on Dec. 31, 1997, and left my Thrift Savings Plan intact until 2003, when I rolled it into a traditional IRA. On the paperwork for the rollover transaction, I find no reference to TSP contributions versus TSP account balance. As I approach age 70½ next year, I realize that I need to know what my contribution (or basis) was. I have filed with the Internal Revenue Service for a tax extension in the hope that I can retrieve contribution/basis info from TSP archives and accurately represent the TSP account in my total IRA…
Q. I am in the military and have a Thrift Savings Plan account set up. I put 10 percent of my paycheck a month into that account. Can I also put $5,000 into a Roth IRA if I am already doing the TSP, or is it a max contribution of $5,000 between them? A. Your eligibility to contribute to a Roth IRA will depend upon a number of factors, including your age, marital status, income and eligibility to participate in an employer-sponsored retirement plan, like TSP. See IRS Publication 590 for details, or ask your tax preparer for help in…
Q. I am thinking about starting to put my TSP contributions into the new Roth TSP. I already have an adequate amount in the regular TSP, and I am thinking the amount going into the Roth will go to my kids after my wife and I are gone. I understand the inherited Roth TSP will be tax-free to them — is that right? I am disappointed I cannot transfer my Roth IRAs into the new Roth TSP — why is that? A. This is basically correct, if you’re talking about federal income tax. There are rules that must be obeyed,…
Q. I cashed out $12,000 from my TSP in 2011 and listed it on my tax return as income — and paid income tax on it. Now H&R block is saying I was supposed to pay a penalty on the withdrawal. About five years ago, I cashed out about $10,0000 and don’t remember paying a penalty. I called the IRS and they were clueless. I am 56 years old and don’t retire for about four to five years. I am again contributing to my TSP. Do you know if I was supposed to pay a penalty to the IRS? A.…
Q: When I am filing my simple taxes, do I need to include my 5 percent Thrift Savings Plan contributions as an investment anywhere in my return? I did not receive any IRS Form 1099s from the TSP, but want to ensure I do the right thing. A: Your TSP contributions do not need to be reported as an investment. The contributions are reported to you on your W-2.
Q: Both my wife and I contributed to a Thrift Savings Plan and an individual retirement account for the 2011 tax year. We filed jointly. My wife maxed out her TSP contributions, but I did not because I was hired midyear. We both maxed out our IRA contributions at $6,000: her to a Roth, me to a traditional. When using an electronic filing program, the software would not include our IRA, but it did so when I ran a fictitious sample filed as a single. Why did the program not deduct the IRA? Is a simultaneous deduction for TSP and…
Q: I understand that when an federal employee, through a rollover, transfers funds from an individual retirement account to the Thrift Savings Plan that the money transferred can only be pre-tax. My wife has both pre-tax and post-tax contributions in the same IRA. The IRA has grown for 20-plus years, so a lot of its value has had no tax has paid on it. Most of what I have read on the issue seems to indicate that because the IRA has some after-tax money in it, none of the money can be transferred into the TSP even though the amount…
Q. When calculating the required minimum distribution for the 2011 tax form, do you use the Individual Retirement Account balance ending Dec. 31, 2010? A. Yes, although under certain circumstances, adjustments may be required. See IRS Publication 590 for details.