Q. This is a follow-up to a prior question. I had asked whether converting my Voluntary Contributions Program account to an existing contributory Roth IRA would be taxable in light of the fact that I had pretax money in the Thrift Savings Plan. You had advised that it appeared to be a nontaxable event but that I should check with my CPA. I do not have a traditional pretax IRA. My CPA didn’t know anything about it, so I asked an expert in the field. The expert cautioned me not to roll over my pretax TSP into a traditional pretax…
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Q. I plan to retire next year with 35 years of federal service (FERS) at age 56, and eligible to receive a Thrift Savings Plan supplement of about $18,000 per year. Once I retire, I plan to work to earn approximately $38,000 per year. Of the earned income, I plan to contribute $17,500 to my 401(k) plan and an additional $5,500 toward the catch-up contribution. The remaining $15,000 will be reported as an earned income on my W-2 and Form 1040. I plan to earn $38,000 for the year, so that my supplemental income will not be deducted $1 from my…
Q. I am the 401(k) specialist for our tribal government. We have a former employee who wants to roll over his 401(k) into making a deposit in CSRS. Is this possible? A transfer from CSRS into a 401(k) is not allowed, so should his attempted rollover be allowed? A. This is not allowed. CSRS deposits are made with after-tax money.
Are you planning to retire soon? If so, you’ll need to figure out whether you’re financially able to make it work in the near and the distant future. Because there are few, if any, truly reliable financial guarantees, this can be a difficult thing to determine. The essential question is this: “Will I have the resources — usually cash — available when I need it to support my desired standard of living for the rest of my life?” If someone else is depending upon you for all or part of their financial support, your retirement decision will affect them, as…
Q. I am a longtime CSRS employee with a pretty good Thrift Savings Plan balance. I plan to retire in two years and move to another city when I retire. My spouse is planning to retire in eight months, and we are planning to buy a house in the new city. We would like to buy the new house and begin the transition to the new city without selling our existing home until I retire. We are looking at a number of ways to finance the purchase of the new home and afford a mortgage payment on that house, a…
Q. I’m FERS and will be retiring in January as soon as we get 100 percent credit for sick leave. I anticipate two checks coming in. If I were to put as much as possible into my Thrift Savings Plan — let’s say I was able to put in $16,000 over the two pay periods — how does the government match this? Is it per pay period or the amount I contribute? What is the consensus to get the most in a short period of time? If I put in all available funds, after deductions, and it is considered pretax, can I…
Q. I am a federal employee considering retiring at age 64. I want to withdraw my Thrift Savings Plan funds in one lump sum, which by then will be approximately $400,000. At what tax rate can I expect to be hit upon withdrawal? A. Your withdrawal will be subject to 20 percent federal tax withholding. Read the document at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf for more information.
Q. I am a FERS employee and will have 30 years of service at age 56, my minimum retirement age. Thus, when I retire at 56, can I start withdrawing from my Thrift Savings Plan without any tax penalty? Or do I have to wait until 59½ to start withdrawing from my TSP to avoid any tax penalty? A. In the circumstance you describe, your TSP withdrawals will not be subject to the early withdrawal penalty.
Q. I am 63 years old and still working. Is it possible to transfer IRA into the Thrift Savings Plan to consolidate? A. Yes, as long as doesn’t contain any after-tax money (usually from contributions that weren’t tax-deductible when you made them). Use Form TSP-60.
Q. I am 63 years old with 37 years in the Postal Service and still working. I plan to retire in two years. I have $250,000 in my Thrift Savings Plan. I have read about contributing 10 percent of my career earnings to the Voluntary Contribution Program, and then moving the VCP money back to Roth IRA to save the taxes. For example, if my 10 percent is $150,000, can I withdraw it from TSP and move it to VCP and not pay any taxes on my TSP withdrawal? A. No.