Q. I am 73, retiring March 1. Is it possible to transfer or rollover my entire Voluntary Contributions Program balance into my Thrift Savings Plan account at my age? A. Only the untaxed earnings may be rolled over into your TSP account. The contributions may be rolled over to a Roth IRA account.
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Q. The Thrift Savings Plan allows contributions this year of $17,500 plus a $5,500 catch-up, whether to Roth or traditional IRA. Internal Revenue Service rules also allow (for certain income brackets) a Roth contribution of $5,000 plus $1,000 catch-up. Can a person over the age of 55 make the $6,000 Roth contribution allowed under IRS rules to a secondary Roth IRA and still make the difference ($13,000) in a contribution to the TSP? A. You are always free to make the full Roth TSP contribution. It’s your eligibility to make the Roth IRA contribution that may be limited, depending upon your tax…
Q. I am covered under CSRS. Can I still open an external Roth account and contribute the $6,000 maximum (plus catch-up)? If so, how would contributing to the Roth TSP interact with contributing to the external Roth? A. The limits for the two are separate, but your eligibility to contribute to a Roth IRA depends upon your tax return for the year. If your income is too high, your Roth IRA contribution eligibility will be phased out. There’s a worksheet in IRS Publication 590 that will help you determine your eligibility.
Q. I am a federal employee under CSRS and over the age of 50. I understand that the 2013 contribution limit for TSP is $17,500 plus an additional catch-up contribution of $5,500, for a total contribution limit of $23,000. My question concerns contributions also made to a Roth IRA account outside the Thrift Savings Plan. For the general public, I understand if you are under the Internal Revenue Service income limit, you can contribute $5,000 plus a $1,000 catch-up contribution to a Roth IRA. I am under this income limit. Therefore, can I contribute the $6,000 to my Roth IRA…
Q. I am 55 with 13 years of service. My wife is three years younger than me and will work three additional years — until I am 65. My Thrift Savings Plan balance is approximately $200,000, and I hope to retire at 62. My wife and I have other investments of approximately $300,000, totaling $500,000 (mostly 401(k), but approximately 20 percent Roth). I understand that when I am retired and after we reach the “threshold,” I will pay one of every two dollars made. Is this true for dollars dispersed from Roth accounts? I understood them to be “tax-free.” A.…
Q. I am a 59-year-old federal employee with 34 years of service under CSRS. I am retiring soon and heard about the Voluntary Contributions Program. I don’t have a wad of cash except accessing some of the equity in my home (I have about $200,000 of equity, and I could pull up to $100,000 out). Is it worth refinancing (at a low 3.5 percent) to access the money and use the VCP to convert it into a Roth IRA? A. Probably not, unless you need the cash for expenses.
Q. I am retired and made a voluntary contribution to CSRS and then rolled it over to a Roth IRA in 2012, prior to my retirement. Now I’m interested in what I need to do, if anything, on my 2012 tax returns regarding this rollover. Will the Office of Personnel Management be sending me a Form 1099-R? Any advice on how to report on my 1040 will be helpful. Pub 590 (tax year 2011) says that “you do not include in gross income any part of a distribution from a qualified retirement plan that is a return of contributions to the plan.” A. We…
Q. I retired from the federal service in 2012. I understand that I cannot make any further contributions to the Thrift Savings Plan since I am no longer a federal employee, and that I cannot undertake a traditional or Roth IRA in 2013 unless I have wages. What I am not clear about is the spousal IRA. It appears to me that because my spouse is still working, I could contribute to a traditional IRA in 2013 as a nonworking spouse if he and I met the income and joint filing qualifications. If this is true, could I then transfer that spousal IRA…
Q. I contribute to the Thrift Savings Plan where you don’t invest the money. What is the difference between the Roth IRA and TSP? Would you recommend that I look into the Roth IRA? A. The TSP is funded with pretax money, but when withdrawn, the money is taxed as ordinary income. The Roth TSP is funded with after-tax money, but the money is exempt from income when it is withdrawn. Everyone who is eligible to participate should consider the costs and benefits of both options, although it can be difficult or impossible to know in advance that one or…
Q. I agreed to a $20,000 retirement incentive bonus offer from the Postal Service and retired in May 2011. The first half of the bonus was paid in November 2011 and the second half in November 2012. Today, I received a W-2 from the Postal Service describing this second half of the bonus as wages received in 2012 even though I officially retired in May 2011 and haven’t worked for them since then. (I had been assuming the bonus payment in 2012 was going to be incorporated into my CSRS retirement accounting.) I haven’t earned any other income since I retired,…