Q. Are the distributions from my tax-deferred TSP account (not Roth TSP) taxed as ordinary income or capital gains when I start drawing the money out? A. Ordinary income.
Browsing: taxes
Q. Can I roll over a Thrift Savings Plan distribution that I received last week to a Roth IRA? A. Yes, as long as it’s not a required minimum distribution. Your tax preparer is responsible for making sure that you obey the applicable rules, however. Self-preparation of all but the simplest tax return can be hazardous to your financial health.
Q. Can the Thrift Savings Plan withhold state income taxes from a monthly payment (scheduled withdrawal)? If yes, what is the procedure? A. No.
Q. My IRA was started when active-duty personnel were permitted to contribute to an IRA with after-tax dollars. I am 66 and want to begin planning for the required minimum distribution with a little long-term projecting. Here is the dilemma. In trying to compute the cost basis and taxable amount, I have to distinguish between the military years “after-tax dollars invested” and the “before-tax dollars investments” contributed during my post-active-duty working years. I found out that for some of the active years, no IRS Form 8506 was filed (showing the contributions for some years). How can I substantiate for the IRS…
Q. I’ve just been flying straight with the L2030 plan until I can get some reliable advice. I would like to keep my capital I have in the Thrift Savings Plan, receive a monthly or quarterly check, and reinvest the amount I don’t need back into my capital. When I turn 70½ (in four years) I’ll have to start receiving the required minimum distribution, which I can’t reinvest. I don’t want to get an annuity because I’d have to give up my capital. How can I hold on to my capital, reinvest in it and possibly leave that money to my children…
Q. Can I transfer funds from Simplified Employee Pension Individual Retirement Arrangement (SEP-IRA) to the Thrift Savings Plan, or does the distribution have to be an “eligible rollover distribution”? I would not move the Salary Reduction Simplified Employee Pension (SAR-SEP) funds if it would be considered an “eligible rollover distribution” due to the withholding for income tax. A. As long as the accounts do not contain any after-tax money, they can be transferred without withholding to the TSP.
Q. If I take money out of an IRA to make a redeposit into CSRS, do I have to pay taxes on the money taken out of the IRA? A. Yes.
Q. I’m unsure of what to do with my Thrift Savings Plan account. I understand that I could leave it in the account as it is until I’m 70½. I can also make a full or partial withdrawal. Full withdrawal is not an option for me. A TSP life annuity (both single or joint life) option is based on life expectancy or until the money runs out. Also there is the TSP annuity vendor (MetLife) where I could get the annuity but money used to purchase this annuity goes to the insurance company if you die before it’s used up.…
Q. My wife and I are getting a divorce. We are both federal employees with Thrift Savings Plans. My plan greatly outvalues hers. In my state, she is entitled to half of the value of my retirement account, and vice versa. Since we are both on the TSP, can I just transfer her entitlement from my account to her TSP account without a tax penalty, as this would be of greater benefit to her? A. She may request that her share be transferred to her TSP account using the appropriate TSP form.
Q. After I retire, I am planning to withdraw $4,000 per month from the Thrift Savings Plan and I am not claiming Social Security. How will Social Security taxes be paid for the TSP I withdraw? A. Social Security taxes can’t be paid from your TSP withdrawals since they are not considered earned income.