Q. I took my tax info to a professional to have them done this year. I’ve maxed out my Roth IRA with USAA. I’ve also contributed about $2500 to a traditional TSP as a uniformed service member. I’m being told I’ll be penalized for my contributions to my Roth account since I have an employer-based retirement plan. Is this accurate? Can I only contribute a total of $5500 for both accounts? I’ve always been told to contribute to both. A. The TSP contribution limit is fixed and not contingent on any other factor. Your eligibility to contribute to a Roth…
Browsing: Roth IRA
Q. I understand that it is possible to transfer Voluntary Contribution account deposits to a private Roth IRA (with any pre-tax interest earned going to TSP), but I’ve also been told there’s a five year ‘holding’ requirement for the Roth. I currently have a private Roth account that is more than five years old. Does the five year requirement mentioned in conjunction with the VC mean that the money should be placed into a new and distinct Roth account, so that an additional five years holding can be tracked, or can the VC contributions (without interest) be added to the…
Q. I am 60 and had to retire early due to disability. I am receiving Social Security disability and a small annuity. Can I take a small amount — say, $10,000 — from my account but then start monthly draws when/if it becomes necessary? Should I leave all of my money in this account or do a rollover into a regular or Roth IRA? A. Yes, as long as you have not previously used your single partial withdrawal. I think you should retain your Thrift Savings Plan account for as long as possible.
Q. Can one transfer money from CSRS voluntary contribution (post-tax money) to a private Roth IRA without tax obligations? Can the interest be transferred to the Thrift Savings Plan? Is the amount transferred at retirement part of the maximum allowed ($23,000) for someone over 50? A. Yes, the VC post-tax money can be moved into a Roth IRA without tax. Yes, the earnings can be moved into the TSP, tax-deferred. No, the amount transferred is not considered a contribution.
Q. I understand that you can transfer funds into and out of your Thrift Savings Plan from either eligible pretax plans and/or after-tax plans. However, withdrawals (loans, withdrawals and interfund transfers) are made proportionately from both the traditional and Roth. Thus, you cannot specify withdrawals from only the traditional or the Roth. This is seen as a major drawback for some who would like to participate in the Roth option only or make withdrawals from only the traditional or the Roth option. Would it be possible, at or near retirement, to transfer a major amount of your TSP balance —…
Q. I have a Roth IRA and Roth TSP, and I am not eligible for catch-up contributions at this time due to my age. What is the maximum I can contribute to both for FY13? A. There is not a combined maximum, and the limits apply to calendar years, not fiscal years. The most that you can contribute to the Roth TSP for 2014 without catch-up is $17,500. The limit for Roth IRA contributions for 2014 is $5,500, but this might be reduced for you based on your tax filing status and income for the year. You should consult IRS…
Q. I’m a CSRS employee nearing retirement. I have read numerous articles touting the advantages of opening a Voluntary Contributions Program account with up to 10 percent of your lifetime civil service earnings and then converting it to a Roth IRA at retirement. In your professional experience, would you recommend qualified individuals follow this approach? Are there potential pitfalls I’m unaware of? A. I certainly recommend that you consider it. I don’t know of any pitfalls other than botching up the transactions and violating some rule. I suggest that you pursue it with the help of a qualified tax adviser…
Q. I have been using a Vanguard Roth IRA Target Fund for my retirement account. Now that I work for the federal government, I have a Thrift Savings Plan standard account and contribute the additional 5 percent to take full advantage of employee matching. I’m 37 and plan on working until at least 67. I believe my best bet is to just keep maxing out my Vanguard Roth IRA, taking full advantage of my employee matching and putting away anything extra I can into my Vanguard Roth IRA. Do you think that is my best bet, or should I stop…
Q. I am a federal employee, almost 30 years old and contribute to my Thrift Savings Plan, as well as a Roth IRA toward retirement. I contribute the maximum to my Roth IRA at $5,500 a year and contribute 15 percent of my $82,500 salary (approximately $12,500 a year). I have a comfortable emergency account, life insurance, $500 per month to a 529 plan for my 1-year-old, on top of the basic necessities. How much should I be contributing if I can’t max both my TSP and Roth IRA? Should I continue with this allocation, or should I be maxing…
Q. If, during the course of my federal career, my income (filed either individually or jointly with my spouse) exceeds the maximum allowed under the Roth IRA rules, do I have to convert my Roth to a traditional IRA? Can you maintain an existing Roth regardless of your income? A. This limit only applies to new money contributions. It does not affect your ability to maintain an existing account.