Q. I will be retiring this year after 21 years in the Air Force. I have $20,000 in the Thrift Savings Plan and was wondering if it would be better to roll it over into an IRA or pay off all of my credit debt. How big of a hit would I take for withdrawing my TSP early? A. It’s impossible to say which is better without some careful planning and analysis. If you trigger the early withdrawal penalty on a TSP distribution, you’ll pay 10 percent of the earnings distributed.
Browsing: military
Q. My husband has been in the military for six years, and he plans on retiring at 20 years from the military. He will then work with the State or Defense Department and work for another 20 years before we retire. I am a DoD civilian employee. We would like to enroll him in the Thrift Savings Plan. But, we are not sure of which TSP plan (traditional or Roth) would benefit us the most. Any advice? A. It’s impossible to know now which will work out to be best for you. Without that knowledge, I prefer the tax break…
Q. I’m a 45-year-old reservist who has been recalled to active duty. I’m also an E-6 with more than 18 years of service. I can afford to invest my entire pay, including incentive pays, and wondered if it would be better to pay off an existing mortgage, approximately $60,000, just refinanced last month at 3.5 percent and a 15-year term? Or would it be better to max out the Roth TSP and set up another deferred account or IRA of some sort? My wife makes about $55,000 per year. A. It’s impossible to say what’s best for you without the…
Q. I am 29 years old and serve in the Air Force. I contribute the maximum $5,000 amount to my Roth IRA every year, and have a few thousand dollars in the standard Thrift Savings Plan. I am concerned about the lack of investing options besides the G, F, S, C, I and L funds within the TSP. With the new Roth TSP option, would it be possible for me to continue to contribute $5,000 directly to my Roth IRA, then contribute $17,000 to a Roth TSP, and finally roll that $17,000 over to my Roth IRA each year? A. Your participation…
Q. I retired from the Navy last year (I have 20 years in) and am receiving my pension. I took a GS-12 job and am under FERS. I’ll be 39 in a few weeks. If I wanted to retire at age 57, what would be my monthly payout? For how long? I understand that there is a three-tier system using the Thrift Savings Plan and Social Security. Am I allowed to draw on those at age 57, or do I have to wait until age 62? Mike Miles: You may begin drawing from your TSP account immediately and without penalty after…
Q. I want to withdraw some money from my Thrift Savings Plan. I need transportation, home repairs and needs for my child. I have a husband who is unreliable, not responsible and does not work, and our marriage is on the rocks. Is there any way I can withdraw money from my TSP without his consent? A. The rules depend upon your employment status, retirement system and the amount and type of withdrawal you take. If you are still an active federal employee, spouse’s rights affect your in-service withdrawal. If you are a married FERS participant or a member of the uniformed…
Q. The Internal Revenue Service deferral limitation for 401(k) accounts is based upon a dollar limitation, which is the same for government and service members who contribute to the Thrift Savings Plan. For federal employees wanting to maximize their TSP contributions, this is a simple process on Form TSP-1: You merely take the current IRS limit ($17,000) and divide it by the number of pay periods (26) and you get the amount you should withhold in each pay period ($653.84). If you receive a step increase, or get promoted, or anything else that changes your pay, there are no effects…
Q. I’m thinking about going to do a GS job after my four years is up in the military. If you go from military to GS, can you keep adding money to your TSP? A. You will begin a civilian TSP account as a civilian employee.
Q. I am a 54-year-old letter carrier with 24 years postal and nine years military. According to Senate bill S.1789, will I be eligible for early retirement? What about the Social Security supplement? How does this affect my Thrift Savings Plan? Can I get that also? A. You will have access to your TSP account for retirement income as soon as you separate from service. You will be subject to the early withdrawal penalty until you reach age 59½ unless you qualify for one of the exceptions listed on page 4 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf. Note that one of the…
Q. I deposited a little money into my Thrift Savings Plan, tax free, about five years ago, when I was in the military serving in Iraq. Since this money is in effect post tax, would it be possible to transfer it from my traditional TSP account to a Roth TSP account, thus allowing it to accrue tax-free interest? A. It is possible. Consult a competent tax adviser for advice about if, when and how you should do it.