Q. I retired from an air traffic control job at age 53. I am receiving monthly payments based on my life expectancy. I will be age 55 in April. Can I take a partial withdrawal? If not, are there any options? I need to access more funds. Will there be a tax penalty on the amount I have received? Will my partial withdrawal be penalty-free now that I am 55? Are there other options, such as increased monthly payments? A. You may not take a partial withdrawal once monthly payments have begun. You may increase your monthly payment amount using…
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Q. I am 60 and had to retire early due to disability. I am receiving Social Security disability and a small annuity. Can I take a small amount — say, $10,000 — from my account but then start monthly draws when/if it becomes necessary? Should I leave all of my money in this account or do a rollover into a regular or Roth IRA? A. Yes, as long as you have not previously used your single partial withdrawal. I think you should retain your Thrift Savings Plan account for as long as possible.
Q. I anticipate starting monthly withdrawals from the Thrift Savings Plan in the near future. Sometime after this, I would like to make a one-time lump-sum withdrawal from TSP to pay for my daughter’s wedding. Can I do this? Can I make a lump-sum withdrawal while taking monthly payments, or am I limited to one or the other? A. You can take the lump-sum partial withdrawal before starting the monthly payments, but not after.
Q. I am 67 and retired. I made a partial withdrawal a few years ago. I need some cash for a family matter, so I want to make a full withdrawal now. I don’t want an annuity, but I’ll invest half in a commercial IRA or retirement instrument in hope of reducing the immediate tax impact of this full withdrawal. Can I do so? — that is, invest half of this full withdrawal in another commercial instrument, thus avoiding for now the tax on this “re-invested” amount? A. Yes.
Q. I retired from civil service in January 2012 with 25 years contributing to CSRS and FERS. I will be 59½ in April. I plan to make a partial withdrawal and have the balance as monthly payments when I turn 60. Will I incur an additional 10 percent early withdrawal penalty before age 59½ since I retired or do I need to wait until 59½? Do I need to wait until 60 to begin receiving monthly payments, or can that start any time? A. Since you retired after the calendar year in which you reached age 55, your Thrift Savings…
Q. I did a partial withdrawal from my Thrift Savings Plan last year at age 60. How do I report the income on my tax return? Is it strictly income? Are there no capital gains to report? If there are gains, how do I determine what the gains were? A. You will receive a 1099 reporting the distribution, which will be taxed entirely as ordinary income.
Q. I will be retiring at age 52 with 27 years as a law enforcement officer. If I do a partial withdrawal of the Thrift Savings Plan for down payment on a house, I know I pay taxes. I also would pay a penalty as I would be taking the partial withdrawal before age 55. Is the penalty 10 percent or 20 percent? Is the penalty directed at the entire amount withdrawn or toward the amount after taxes? A. The penalty is 10% of the gross amount.
Q. 1. I am retired at 52. If I take a life expectancy withdrawal through the Thrift Savings Plan from now until I reach 59½, can I then roll over the balance of my account to a privately held traditional TSP such as Vanguard? Or does taking the life expectancy withdrawal through the TSP commit me to them for life? 2. If I receive life expectancy withdrawals now through the TSP, can I still take a partial withdrawal (amount of my choosing) when I am 59½ without the 10 percent penalty? 3. If I roll over my entire TSP account now to a…
Q. I have to withdraw my Thrift Savings Plan because of my age (70½). I am indecisive as to: 1. Withdraw all to a saving account 2. Get a partial withdrawal for 120 months, or 3. Withdraw part of it and gradually withdraw the rest over a 10-year time span. My considerations are: 1. No taxes, as I understand it, over a period greater than 10 years on a gradual withdrawal 2. Putting me into a higher tax bracket. What advice or comments can you give me? A. Unless you can come up with a good reason – that is,…
Q. My husband will be retiring in June 2014. He will turn 50 in March 2014. Can we still contribute the full $17,500 plus $5,500 catch-up (I realize next year contribution limits may increase) even if he is only in for half a year? A. Yes, as long as his pay will support the deferrals. The limits are not adjusted for partial years.