Q. I’m a FERS retiree, age 64, with a $36,000 annual pension. My spouse has a $40,000 annual salary. We have a rental property that brings us $24,000 a year. And we have a home mortgage balance of $500,000. Our living expenses so far do not require me to withdraw my $600,000 Thrift Savings Plan fund. I plan to live until age 85. As I approach age 70½ with minimum distribution, what is the best tax strategy for transferring the $600,000 from the TSP into a private investment account? A lump-sum rollover into a Roth account after paying the taxes? A calculated…
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Q. I have five years at the Veterans Affairs Department and 4½ years at the Transportation Security Administration and am about to be suspended/terminated (FERS). Being non-military, can I leave my Thrift Savings Plan and FERS with the government without penalty or roll over to Vanguard since I am not 56? I have more work time in the private sector than with the government. A. You may maintain and manage your TSP account for as long as you live. You may also roll your TSP money over to an IRA and close your account after you separate, without penalty, regardless…
Q. I am in FERS and I am planning to pay in full my CSRS redeposit service balance for my 17 years of prior CSRS service. I want to pay via direct transfer of a check sent on my behalf from the Thrift Savings Plan to the Office of Personnel Management. TSP tells me it is permissible, and all I need OPM to do is to fill out TSP Form 75 and have OPM check that it is an eligible retirement plan and include the address where to mail the check. This would be a trustee-to-trustee direct transfer. Three different…
Q. On Oct. 10, 2009, you said that you could begin receiving fixed payments and switch to an annuity. On Nov. 8, 2010, you responded to a similar question with the opposite advice. I am trying to decide whether to take payments while hoping the providers’ rates improve or go to a fixed index annuity with another company. Is the decision to take payments in the Thrift Savings Plan irreversible? A. My Oct. 10, 2009, answer was incorrect. You may not end a series of automatic monthly payments with a TSP/MetLife annuity purchase. That option is only available when starting…
Q. I was contributing to the Thrift Savings Plan since 2002, when the program started, until 2009. I don’t contribute now on a monthly basis because I am not a government employee yet. I still put in money from time to time, like rolling over a 401(k) from a previous job. I have close to six figures in my plan. I plan on working for another 20 years, hopefully in the government sector soon. I currently have all my money in the G Fund. I have always been nervous to put money into those other funds. Can you provide me tips on…
Q. I live in Alabama. I’m 32 and have worked about six years in the federal system. I am vested, and just left to work with a contractor. I have $7,400 in my Thrift Savings Plan account and want to do a full withdrawal. If I do the withdrawal, do I get that number since I’m vested, or only what I’ve contributed? Also, when or if I withdraw it, I know I will have 20 percent withheld. Will it hurt my tax return next year? If so, how do I avoid that? A. You may withdraw your vested balance. That’s…
Q. I am in my early 20s and have just left a federal job. I am trying to decide what to do with my Thrift Savings Plan money. I’m leaning toward rolling it over to an IRA but do not understand where to start. Where do you get the forms to do this? Is it a good idea? (Cashing it out would have been my next option.) A. The best thing you could do with it is to leave it in the TSP and manage it there for as long as possible. In fact, if you have IRA, 401(k) or…
Q. I recently turned 59½. I want to do the following with my retirement account, which the Thrift Savings Plan does not allow: I want to be able to withdraw small amounts of funds from time to time from my retirement account, generally limited to a portion of the gains earned by the account. TSP allows a one-time in-service withdrawal. I want to have the ability to make transfers between funds. TSP limits transfers to two per month, but if the first is into equities and the second is into the G Fund, effectively that means only one transfer into equities a month.…
Q. I am planning on retiring at age 56½. I am a CSRS employee. If I take my Thrift Savings Plan balance and roll it over to an IRA, can I start withdrawing it immediately, or do I have to wait until I am 59½ years old? A. The rules are different for IRAs than they are for the TSP. Under the scenario you propose, you will be exempt from the early withdrawal penalty for distributions taken from your TSP account because you retired during or after the year in which you will reach age 55. There is no similar…
Q. I am a 55-year-old postal worker of 27 years who has a work-related medical problem. Last year, I was let go on “no work available status” and have been on workers’ compensation since. I have applied for postal disability and am waiting to see what happens with that. So far, I’ve received no letter of separation nor postal job offer. Will I be able to access my Thrift Savings Plan without penalty if I become separated from the Postal Service and am granted disability retirement? A. The answer depends upon your specific circumstances. If you separate from service during the…