Q. I’m thinking of retiring at age 66 (I am FERS). How do I access my Thrift Savings Plan without any penalties or taxes? Is there a limit of withdrawal per month? A. Because of your age at retirement, your TSP withdrawals will not be subject to the early withdrawal penalty. They will be subject to income tax, however, unless you roll the withdrawal over to another tax-deferred account.
Browsing: retirement
Q. When the Philadelphia Naval Shipyard closed in 1995, I withdrew all $29,000 of my CSRS money. I had 16 years of service time at the shipyard. After years of working in the private sector, I have now worked six years (two temporary, four permanent) for the government under FERS. I was told I would have to pay back $61,000 or I would owe $35 a month when I retired (to keep my health insurance.) I do not have $61,000. I have $31,000 in my Thrift Savings Plan account. I am 64 years old and my body is worn out…
Q. I retired the end of July 2011. Since then, companies are coming out of the woodwork requesting that I invest my Thrift Savings Plan funds with them because “keeping it in the TSP will not allow growth due to the fact that I am no longer contributing.” But I am hesitating to do anything with it because once I hear their fees, it scares me. I don’t expect to need the money and would like it to grow into a nice inheritance for my daughter. I have about 90 percent in the G Fund and the remaining 10 percent divided…
Q. During a retirement seminar, I was told that federal employees who retire during the year they turn 55 but before age 59½ have a one-time opportunity to withdraw funds from the Thrift Savings Plan without paying the 10 percent tax penalty. Is this correct? If so, how should this withdrawal be reported to the Internal Revenue Service so that the penalty is not assessed? I am a retired federal law enforcement officer, which may or may not be relevant. A. This is bunk. If you retire during or after the calendar year in which you reach age 55, any and…
Q. I am 56 years old with 38 years of service including military time which I bought. I am under FERS. I am seriously contemplating retiring any day now. Can I, at this age of 56, withdraw from my Thrift Savings Plan? What are the penalties, if any? What about the 20 percent that TSP automatically deducts? Also, what about the federal taxes? A. Under the circumstances you describe, your post-retirement TSP withdrawals will be exempt from the early withdrawal penalty. Your withdrawals will be subject to federal income taxes for the year of the withdrawal, and there may be withholding…
Q. I am CSRS and will be retiring next year. I will be making a contribution (after-tax) to the Voluntary Contributions Program before retiring. I have an existing Roth IRA (after-tax), reflecting contributions I have made over the years. I do not have a traditional IRA (pretax). I do, however, have money in the Thrift Savings Plan (pretax). I plan on converting the VCP contributions (after-tax) to my Roth IRA (after-tax) at retirement. Any interest earned (pretax) in the VCP will be transferred to the TSP at retirement. After doing some research on this and reading IRS Pub 590, it…
Q. My husband retired from 36 years of federal service on June 2. He is in CSRS. We hope he will begin receiving his check within a month or two. Given that he retired halfway through the year, and given that his initial checks will be only 60 percent to 70 percent of what is due, we anticipate that he could get the money owed for those first months in a lump sum in the next tax year. This could be a sizable sum and could have significant tax consequences. It also makes it hard to plan for the correct amount…
Q. I have a Thrift Savings Plan loan and I am retiring. I’m reading everywhere and understand that I must pay back the loan to avoid a taxable distribution. What is the time frame for that? Your reply to someone last year was, “Your loan balance will be automatically declared a taxable distribution if you fail to repay it after you retire.” But is there is time frame after I retire? Does it have to be paid by the day I separate, or can it be paid a few weeks after my official date of retirement? A. You will have…
Q. I am 61 and plan to retire at the end of this year. I have about $60,000 in the Thrift Savings Plan. Should I withdraw this year or next for a better tax benefit? A. It’s impossible for me to say, since this will depend upon your tax returns and the tax code for this year and next. In general, however, I recommend that you leave your money in the TSP for as long as possible.
Q. I retired under the provisions provided for federal law enforcement officers at age 52 (I’m now 58) under CSRS and am confused concerning under what circumstances and when I can withdrawal my entire Thrift Savings Plan balance without paying a 10 percent tax penalty. It’s my understanding, after reviewing the information in the TSP book, that after age 55, you can begin making withdrawals from your TSP either as a monthly paid annuity based on life expectancy or monthly installment payments but that the 10 percent penalty will apply if I withdraw the balance lump sum if done before…