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…
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Q. I have 27½ years in the Postal Service and I am 52½ years of age. If an early-out comes in the next few months, will I get a penalty for leaving? Do I get my special retirement supplement, or do I have to wait for that? Also, do I get to take my Thrift Savings Plan now, or do I wait for that? A. Mike: The early-out has no effect on the Internal Revenue Service early withdrawal penalty. You will be subject to the penalty until you reach age 59½ unless you qualify for one of the exceptions listed…
Q. I spent 22 years with the Postal Service and quit in 2010 to take another career. I was under FERS. Do I get a pension from the Postal Service, or is that what the Thrift Savings Plan is? And can I collect it at 55? A. Mike: If you left FERS service before the calendar year in which you reach age 55, you will be subject to the early withdrawal penalty rules. Reg: If you didn’t take a refund of your retirement contributions when you left, you can apply to the Office of Personnel Management for a deferred annuity…
Q. I am a 53-year-old recent retiree (I was offered a Voluntary Early Retirement Authority through the Postal Service and accepted it). Is there a penalty to move my Thrift Savings Plan account to an immediate fixed annuity? If so, what would that penalty be? Additionally, I heard that within one year of retirement, my TSP account should be transferred to a civilian account (IRA, savings, etc.) What exactly is the time frame for that? A. The only penalty for using your TSP account to purchase an immediate fixed annuity in retirement is that you’ll be locking in historically low…
Q. I agreed to a $20,000 retirement incentive bonus offer from the Postal Service and retired in May 2011. The first half of the bonus was paid in November 2011 and the second half in November 2012. Today, I received a W-2 from the Postal Service describing this second half of the bonus as wages received in 2012 even though I officially retired in May 2011 and haven’t worked for them since then. (I had been assuming the bonus payment in 2012 was going to be incorporated into my CSRS retirement accounting.) I haven’t earned any other income since I retired,…
Q. I am a 52-year-old Postal Service employee and am seriously considering liquidating my TSP account. What are the penalties for this action? Would there be a less painful way to do this to lessen the amount of money I will lose? A. The early withdrawal penalty is 10 percent of the gains in the account. The only way to avoid the penalty is to meet one of the exceptions listed on Page 7 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf.
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 am taking the Voluntary Early Retirement Authority from the Postal Service and am trying to decide how to withdraw funds from my Thrift Savings Plan. I have about $300,000 in my account and have a mortgage of $150,000 with about 10 years until payoff. Should I take a lump sum and pay off my mortgage and keep the remaining money in TSP? Or should I just start withdrawing approximately $2,000 monthly to cover mortgage payments? I am afraid if I pay off my mortgage, the tax hit would be to great. A. I suggest that, as long as your mortgage…
Q. I will be retiring Jan. 31 from the Postal Service. In May, I will receive $10,000 and in May 2014, I will receive $5,000. Can this compensation be used to fund an IRA in years 2013 and 2014 even though I will be retired and not working another job? Is this considered earned income? I know federal and state tax will be deducted. I don’t know yet if Social Security will be deducted, too. What are your thoughts on this? A. I believe that these payments are considered retirement income, and, therefore are not considered the basis for IRA contributions, but you should consult…
Q. I am taking the Postal Service Voluntary Early Retirement Authority on Jan. 31. I’ll be 56 then. I’d like to take a full withdrawal from my Thrift Savings Plan in monthly payments and then possibly roll the balance into an IRA at age 59½. I understand that 20 percent will be withheld automatically from my monthly payments for taxes. If I withdraw the balance a few years later, will the 20 percent figure still apply, or can I roll it into the IRA without the tax hit?