Q. I am a Federal Employees Retirement System employee, and I am confused regarding which of my three retirement components are subject to federal and state taxes. Basic annuity? Thrift Savings Plan annuity? Social Security supplement? A. Distributions from your TSP account are considered taxable income.
Browsing: Social Security
Q: Wouldn’t someone have a penalty for taking out Social Security benefits before age 66 such that the person would not be getting $21,000 at age 62? A: No, $21,000 is approximately the maximum Social Security benefit at age 62.
Q: I have seen conflicting opinions on how the FERS annuity supplement is taxed at the federal level. Is it fully taxed, or is it taxed at 50 percent if your combined income is $32,000 to $44,000 and taxed at 85 percent if your income is $44,000? I start receiving the FERS supplement in June and I have to know how it’s taxed for next year’s tax filing. I retired under FERS. I get the supplement from my MRA of 56 years old until I’m 62 years old. A: It is taxed as if it were a Social Security benefit.…
Q: I understand that the Thrift annuity payment is for life. Does that mean until death? As a FERS retiree, will my Social Security annuity be reduced based on how much I have in my retirement fund (frozen CSRS) and/or Thrift account? A: Is this a trick question? Yes, a life annuity means that payments continue, on an accrual basis, until the annuitant’s death, unless a survivor benefit option is elected at the time of purchase. In that case, the payments continue until the survivor dies, if later. Your Social Security benefit might be reduced by the Windfall Elimination Provision…
Q: I am 52 years old with 27 years with the Postal Service (FERS). How would it affect me if I accepted the Voluntary Early Retirement Authority (VERA)? Would I get the Social Security Supplement upon acceptance, and how would it affect my TSP, as I would need to start withdrawing it immediately upon accepting the VERA? A: Under this scenario, your TSP funds will be subject to the early withdrawal rules until you reach age 59 1/2. You could avoid the early withdrawal penalty, however, by initiating a series of Substantially Equal Periodic Payments (SEPP) under IRS code section…
Q: I recently retired from the federal government. If I take my money out of the Thrift Savings Plan in a lump sum, will I have to pay Social Security and Medicare taxes? A: No.
Q: I will begin my first federal job soon. I turned 60 about one month ago. Must I work until age 65 to be eligible to receive Social Security or Thrift Savings Plan payments? I will have approximately four years and nine months of creditable service. A: Not necessarily. Your eligibility for drawing Social Security benefits based on your own record will depend upon your age and your history of contributing to the program, among other factors. You should visit www.ssa.gov for details. The rules for contributing to and withdrawing from the TSP are available at www.tsp.gov. In neither case…
Q: I’m a Federal Employees Retirement System employee and I am confused about what advantages there are to the payroll tax deduction reducing the contribution into Social Security from 6.2 percent to 4.2 percent in 2011 as part of a payroll tax holiday. Won’t I still need to pay 6.2 percent at the end of the year when I’m filing my taxes? And will it not also affect my Social Security? A: No, you won’t have to pay the difference at the end of the year. Right now, Social Security benefits are not indexed to the rate at which you…
Q: I keep hearing that there is some kind of bill being touted by a congresswoman from New York that would “take” all of our Thrift Savings Plan money and everyone’s 401(k) money and put it into the Social Security system without our consent. Is there any truth to this, and if so, what do you think the chances are of this actually happening? Should we be concerned? A: There has been talk in lawmaking and policy think tanks about this strategy for changing the retirement system. I can’t possibly handicap the odds of such a thing happening, but it…
Q. When we retire under federal law Enforcement and receive the Social Security Supplement under FERS, are Social Security and Medicare taxes withheld on our FERS annuity and supplement checks? A. No, they are not.