Q. I am a retired CSRS employee. What taxes, if any, do I owe New York state on annual distributions? The initial contributions were not taxed by New York. A. Your distributions are considered ordinary income for tax purposes. They should be reported as such on your federal and state tax returns, unless your state provides a special exemption for this type of income. If you want specific guidance for completing your tax return, you should seek the help of a qualified tax preparer.
Browsing: retirement
Q. I am working, waiting for approval of disability retirement under FERS. Will I be penalized 20 percent if I withdraw my Thrift Savings Plan in lump sum when I am approved for disability? I was diagnosed with Stage II multiple myeloma in May. A. The exemption from the early withdrawal penalty to which you are referring is for a distribution taken as a result of a total and permanent disability. The TSP cannot certify that you qualify for this exemption and it is up you, or your tax preparer, to demonstrate that you meet this exemption.
Q. I am a 59-year-old federal employee with 34 years of service under CSRS. I am retiring soon and heard about the Voluntary Contributions Program. I don’t have a wad of cash except accessing some of the equity in my home (I have about $200,000 of equity, and I could pull up to $100,000 out). Is it worth refinancing (at a low 3.5 percent) to access the money and use the VCP to convert it into a Roth IRA? A. Probably not, unless you need the cash for expenses.
Q. All of my Thrift Savings Plan deposits are in the G Fund. I am a CSRS retiree. Since most of these funds are interest earned on federal bonds, are my withdrawals taxable by the state? I know they are federally taxable. I believe my contributions (which started in 1987) were both federal and state tax deferred, but I can’t recall with certainty. I called the Montana State Revenue once on this and they said they aren’t state-taxable, but I have my doubts. A. You should consult a qualified tax preparer for the answer. In general, your withdrawals are taxable, unless your…
Q. I am retired and made a voluntary contribution to CSRS and then rolled it over to a Roth IRA in 2012, prior to my retirement. Now I’m interested in what I need to do, if anything, on my 2012 tax returns regarding this rollover. Will the Office of Personnel Management be sending me a Form 1099-R? Any advice on how to report on my 1040 will be helpful. Pub 590 (tax year 2011) says that “you do not include in gross income any part of a distribution from a qualified retirement plan that is a return of contributions to the plan.” A. We…
Q. I am looking to establish residency abroad after retirement, either in France or Germany. Is there any guidance on direct deposit of FERS and Social Security annuities, and Thrift Savings Plan distribution, to foreign banks? A. Direct deposits from your TSP account can only be made only to financial institutions in the United States.
Q. I notice that in several of your responses to people requesting guidance on how to allocate their Thrift Savings Plan account, you use as a ‘default’ answer to choose the L Fund that most closely corresponds to their life expectancy. The guidance on the TSP Web page advises the following: “Determine the date when, after leaving federal service, you will need the money that is in your TSP account. Then identify the L Fund that matches your target date.” If I’m 51 and plan to retire and begin tapping my TSP at age 59, according to the TSP guidance, I…
Q. I am working for Department of Agriculture-Natural Resources Conservation Service and anticipating retirement Jan. 14, 2014. My birthday is May 6, 1943. I would like to know the requirements and how to apply for the required minimum distribution. Is there some kind of window of the first and last opportunity to take the RMD? A. Under the circumstances you describe, you will have to take the first required minimum distribution from your TSP account for tax year 2014 by April 1, 2015. You can learn more about how to calculate and request the RMD by reading the notice at https://www.tsp.gov/PDF/formspubs/tsp-775.pdf
Q. I retired from the Transportation Security Administration on Aug. 1 under CSRS Offset. I was employed in the 1970s and 1980s and owe approximately $42,000 if I wish to buy back this time and get credit for it in my annuity. I was considering using my Thrift Savings Plan dollars for part of this buyback instead of taking the TSP as an annuity or lump sum. Is it possible to transfer the TSP balance to CSRS in some way so that I would not pay a withdrawal fee or taxes on it? (I am 66). A. No.
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,…