Q. I recently received my “FERS Your Personal Benefits Statement Based on your Account as of January 01, 2012.” It states, “As of December 31, 2011, your TSP account balance was $130,841.13. It goes on to say, “Assuming you continue TSP contributions [$877 per pay period] at the same rate and earnings on your account average 7% [Wow. How unrealistic is this!], your estimated TSP balance when you are first eligible to retire would be $158,107.” My current TSP balance is $137,000. It gives estimated Thrift Savings Plan monthly annuities as follows: If you retire at age 64, your single life annuity…
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Q. I have been reading your column and am confused. There have been references to receiving a full lump sum payment of Thrift Savings Plan money upon retirement with 30 years of federal service without the 10 percent penalty. Is this true if I am 51 years old, retirement-eligible with 27 years as a law enforcement officer plus five years regular retirement service? A. No. The relevant exemption to the early withdrawal penalty has nothing to do with years of service but with age. You must retire during the calendar year in which you reach age 55 for it to apply.
Q. Can I retire from the Veterans Affairs hospital under FERS at age 55 with 25 years of service and withdraw my Thrift Savings Plan in lump sum. Or do I have to wait until I am MRA? Can I leave at 55 and defer my retirement until I reach my MRA at 56? A. Reg Jones says: You can’t retire until you reach your minimum retirement age, which is 56. If you retired then, your annuity would be reduced by 5 percent for every year you were under age 60 (5/12 of a percentage point per year). You could…
Q. Will the Thrift Savings Plan automatically withhold money toward my federal and state taxes each month if I choose monthly withdrawals at retirement? A. Federal withholding; yes. State withholding; no. See the table on Page 2 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf for details.
Q. I will be retiring (CSRS) at the end of this year. I understand there are several options available with my account. However, I haven’t been able to find any clear/accurate information. Can I take it out as a lump sum? (Is there a negative to this?) As a retiree, can I leave it in place? (One article seemed to state that if a person does this, they receive a small monthly check of some sort.) A. You’ll find the information you need here: https://www.tsp.gov/planparticipation/withdrawals/accountOptions.shtml.
Q. I am a federal employee with more than 34 years of service under CSRS. I am planning on retiring Jan. 3, 2013. The amounts I earn in pay period 26 (Dec. 16-29, 2012) and pay period 27 (Dec. 30, 2012-Jan. 12, 2013) will not be paid to me until after Jan. 1, 2013, and will therefore be shown as taxable income on my 2013 W-2. Can I designate 100 percent of my net earnings for those two pay periods to my Thrift Savings Plan to reduce my taxable income for 2013 and maximize my TSP account? A. You may defer…
Q. My husband and I are federal retirees (both 65). We are buying a second home. We are contemplating withdrawing our down payment (50 percent; $130,000) from our Thrift Savings Plans. We are trying to determine the best way to handle the tax issue. Does it make more sense taxwise to withdraw a large amount (130,000) and incur the 20 percent tax hit, or make a lower down payment (20 percent; $52,000) and request an annuity of $1,000 per month, thereby reducing our yearly tax liability? We are currently in the 25percent tax bracket. A. The only way to answer this question responsibly…
Q. I am in the military and have a Thrift Savings Plan account set up. I put 10 percent of my paycheck a month into that account. Can I also put $5,000 into a Roth IRA if I am already doing the TSP, or is it a max contribution of $5,000 between them? A. Your eligibility to contribute to a Roth IRA will depend upon a number of factors, including your age, marital status, income and eligibility to participate in an employer-sponsored retirement plan, like TSP. See IRS Publication 590 for details, or ask your tax preparer for help in…
Q. As I read the information in the retirement pamphlets, it states that “a blood or adopted relative closer than first cousins (this includes children, siblings and a parent) are presumed to have an insurable interest.” If I retire in good health, could I elect an insurable interest survivor benefit for my adult son or daughter (blood relatives) even though they are not my dependent or disabled? A. Yes.
Q. I’m a 50-year-old postal clerk (FERS) with 23½ years of service, and I want to get out. I want to move from Florida back to my home state 1,000 miles away. I think I only have four options, and I’m looking for advice on what would be best for me. 1. Retire with 50/20 and either pay the penalties or defer or postpone annuities? If I do that, what will the penalties be? 2. Stick it out for another year and a half until I have 25 years of service and retire. If I do that, will there be…