Q. I am married, 60 years old and a FERS employee. I am not sure when I plan to retire, but I have a Thrift Savings Plan account and other investments. I would like to transfer as much as I can to the TSP account to have the best return. How will I be taxed on the money if it is going from one investment company to my account and then directly into TSP? Will it be taxable income for 2014 even if it was just a transfer? A. Transfers from a retirement plan account into the TSP are not taxable.
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Q. I am an FERS employee and, for various reasons, have selected Nov. 28, 2015, as my retirement date, age 60+ with 21 years civil service and four years military, for which a deposit has been made. One of the many reasons that I selected this date was so that I could have a Thrift Savings Plan residential loan balance declared as a taxable distribution during the 2015 tax year, because I will have substantial withholdings by that time, and given my tax return history, would have a significant tax overpayment that would be useful in paying a portion of…
Q. I have 38 years with the federal government. I have 240 hours of stored leave and, if I save my annual leave this year, I will have 208 hours of annual leave. This equates to 448 hours times my base pay, which is $33.92 for $15,196. When I retire at the end of this year, can I roll my lump-sum payment over to my Thrift Savings Plan account before taxes? A. No.
Q. I sent TSP Form 77 to the Thrift Savings Plan requesting that funds be withdrawn from my account and sent to a non-TSP IRA. When I returned from overseas, I discovered that a mistake had been made on the forms and instead of all of the requested funds going to the IRA, TSP sent 50 percent of the funds to the IRA and 50 percent to me less a hefty amount to the Internal Revenue Service. I asked for a reversal of the action, but the Federal Retirement Thrift Investment Board turned me down, saying that TSP had not…
Q. I’m planning on retiring this year at age 62 under FERS. I will have an outstanding Thrift Savings Plan loan balance of $16,000 and was not planning on repaying the rest of the balance and was needing to find out if the outstanding balance will be considered income and taxed with my other income for the year at the end of the year, since it will be tagged as taxable distribution? A. Yes, any loan balance outstanding 90 days after separation will be declared a taxable distribution at that time and reported as ordinary income for that year.
Q. I’m 66 and contributed money to a Roth IRA. I would like to withdraw all of it. Do I have any tax consequences? A. Not as long as you’ve had the Roth IRA for at least five years. The rules are a little tricky for figuring this out, so you should consult Internal Revenue Service Publication 590 and/or a tax adviser before proceeding.
Q. My previous employer allowed post-tax contributions to the 401(k) plan after the maximum allowed pretax contributions had been reached. Can I transfer the post-tax contributions of my previous employer’s 401(k) plan to the Roth TSP? A. No.
Q. My wife is a federal employee with 28 years of service and is covered by FERS. She plans on retiring soon, and we have heard that she can take funds (post-tax) and dump them into the Thrift Savings Plan equaling the cumulative difference through the years of what she was unable to put into the TSP. Can you shed any light on this info? A. You may not ever deposit post-tax money into a TSP account, and, except for Federal Erroneous Retirement Coverage Corrections Act cases, there is no provision to make up past contributions that could have been…
Q. How is the federal matching amount handled for the Roth TSP option? Under the traditional TSP, that amount is added to the deferred compensation and taxed when distributed. Is the matching put into the Roth? When is it taxed? A. Matching is based on amounts you contribute to either the traditional or Roth TSP accounts, but agency contributions are directed entirely to your traditional TSP account.
Q. I have separated from federal service with an existing Thrift Savings Plan loan. My intent is to take a lump-sum withdrawal and take a taxable distribution versus paying off the loan. In the end, will I end up paying more or less tax if I were to pay off the loan versus taxable distribution? A. It’s impossible to say what you’ll pay “in the end,” but if you repay the loan on time, your tax on the money owed will be zero until it is ultimately withdrawn.