Q: I just saw a short article in your blog (12/29/10) that contains a reference to Congress getting its hands not only on TSP funds, but private-sector retirement accounts as well. I have seen articles already that discussed lawmakers raiding the TSP, but this is the first reference I have seen to them stealing non-government retirement accounts. However, there is little detail given. Can you provide more information on this issue, i.e., what is the source, status, etc.? A: I’m not a political reporter, and don’t spend much time tracking proposals of this kind. I have read a few stories…
Browsing: retirement
Q: I plan to retire from a federal law enforcement position at the end of February. I am covered under the Federal Employees Retirement System and will have an outstanding Thrift Savings Plan loan balance when I retire. I assume that there will be some type of “demand for payment” notice sent by TSP, and if I don’t repay the loan by a certain date, the balance will be considered a withdrawal. Will the TSP deduct the 10 percent penalty from my account, or will they bill me? Will the “withdrawal” be taxed along with my regular income on my…
Q. I am 73 years old and still working for the government. Am I still required to remove funds from TSP even if working for the government and depositing TSP funds with them? A. No.
Q. I am a federal firefighter under CSRS Special Retirement due to retire in November 2011 at age 50. At what age will I be able to collect on my TSP retirement? A. You may tap your TSP account as soon as you are retired, but you will be subject to the early withdrawal penalty until you reach age 59 1/2 unless you roll over the withdrawal, use the withdrawal to buy a life annuity, take a series of Substantially Equal Periodic Payments under IRS section 72t, or meet one of the other specific exceptions to the rule.
Q. I was hired this month as a GS under FERS. I believe that I would like to buy back my military time (9.5 years with the Air Force) for retirement. I spoke with someone yesterday who told me that I could use 401(k) / IRA monies to do this buyback. Is this true? Where can I find the rules regarding the buy back? A. You can only use these funds for the buyback if you withdraw them from the retirement plan account first.
By now, I’ll bet that most Thrift Savings Plan investors have figured out that actively trading TSP funds, either for short-term profits or to avoid short-term losses, is an unreliable way to fund their retirement standard of living. But if speculating on short-term moves in share prices is the wrong way to try to build wealth, then what is the right way? Buy and hold? There is no shortage of advocates for the proposition that simply buying quality investments and then holding them indefinitely will lead to superior investment results. I’m sorry to say it’s not that easy. For starters, the…
Q: I plan to retire from the Postal Service on Dec. 31, 2010. Any word on the suggested rolling terminal annual leave into TSP? A: Not that I’ve heard.
Q: I am a 56-year-old FERS retiree who accepted the early out incentive agreement with the Postal Service in November of 2009 and have not worked since. Would the $5,000 incentive payment I am to receive in November 2010 be eligible for a $5,000 IRA contribution for tax year 2010? A: No.
Q: In a recent response you said, “Your income will be taxed in the year in which it is constructively received.” What does that mean? If I retire on Dec. 31, 2010, and receive my last paycheck in January, which will include my lump-sum payment for terminal annual leave, isn’t that money taxed as income received in 2011? Will it not be shown as income on the W-2 for 2011, not 2010? A: It is not unusual for an employer to include income on the W-2 or 1099 for the year in which it was paid, even though the income…
Q: At a recent retirement seminar I attended the speaker mentioned advantages to having a universal life policy that could be converted to a disability policy over paying for a long term care insurance policy. One of the advantages mentioned is the fact that any unused money would go to beneficiaries, whereas under a long-term policy you either use the money or it goes when you go. Why buy a long-term care policy when you can have this benefit? A: It costs more.