Q. My wife and I are FERS employees. We are both considering retiring early if offered Voluntary Early Retirement Authority at ages 50+/- (both with more than 25 years of service). With children still in the picture for some time, access and flexibility with our Thrift Savings Plan accounts are crucial to any plan. I would like to accomplish two things: 1). 72(t) withdrawals until 59½ in one account. 2). Flexibility to roll over funds currently in TSP into a Roth IRA held at another institution (from an IRA as I see no method to do that while the funds…
Browsing: taxes
Q. I am a federal employee who will be retiring Jan. 3 after 40 years of service at age 58½. I took a necessary loan on my Thrift Savings Plan and will still have a balance on my loan when I retire. I understand I have 90 days to pay back the loan or I will be taxed for the money owed. I do not need my TSP money now. I would like to keep it there or invest somehow, not sure yet. I do not want to pay the money back, which makes no sense to me since I can take…
Q. I turn 70½ in April 2014. My required minimum distribution can be taken anytime during 2014. Is it calculated on the balance in my IRA for 2013 or 2014? If I take it in 2014, the year I turn 70½, will I also have an RMD taken out Dec. 31, 2014, on the balance in my IRA in 2014? Will I have two RMDs in 2014? A. Your RMD amount for each tax year is calculated for each account that is subject to the RMD, and is based on the preceding year’s ending account value.
Q. If I roll over my military Thrift Savings Plan into my civilian TSP, will I pay taxes? A. Not on the rollover.
Q. I am reading TSP-775 (6-2013) concerning important tax information about TSP withdrawals. First paragraph (Deadline for withdrawing your TSP Account) states that “By April 1 of the year following the year you become age 70.5 and are separated from Federal Service, the TSP requires that you withdraw your entire account balance in a single payment.” It goes on to give options about monthly payments, life annuities. This leaves me perplexed. I thought I only needed to withdraw the required minimum distribution after becoming age 70½. Also, I thought if I have other IRAs, I could take the RMD from those and leave…
Q. I am a CSRS Postal Service employee and plan to retire at the end of 2014, when I will be 55 years old with 38 years of service (including sick leave). After reading other answers, I understand that I can immediately withdraw funds from my Thrift Savings Plan without penalty but would like advice regarding those withdrawals. Considering that TSP withdrawals are subject to regular income taxation, is it beneficial to move the funds to an IRA? Would I avoid any tax? Other than future growth potential and smaller tax rate, is there any benefit to delaying withdrawals until later in…
Q. I am 70 years old and have about $100,000 in my Thrift Savings Plan accounts. Can you guide me toward the best options to withdraw the amount? I would prefer to pay the least in taxes to Uncle Sam. A. To minimize the tax burden from required minimum distributions, you should request distributions based on your life expectancy under IRS rules. For the first distribution — the one due for the year you reach age 70½ or retire, whichever comes last) — you should consult a tax adviser to determine whether it is better to take it in that…
Q. I am retired and turn 70 this month. Even though I do not want to begin distribution of my Thrift Savings Plan investment, I understand that by law I must select a required minimum distribution program. My dependent spouse is 76 and also retired. I am healthy and, with my family genetics, could expect to live to age 100. I do not need the TSP to live on and want to maintain it in the TSP investment form for as long as possible. Under these circumstances, what is the best RMD to select: a life annuity or a TSP monthly payment? Should it be…
Q. I am 58½ and a federal employee. Can I take all or part of my Thrift Savings Plan and move it to a self-directed IRA? Or do I have to wait until I am 59½? How much tax will I have to pay on this? A. You may not take an in-service withdrawal for rollover to an IRA until you reach age 59½.
Q. I retired in 2011 and must start required minimum distributions soon. I understand taxation if the Thrift Savings Plan sends me fixed dollar payments or if TSP pays out based on life expectancy. But what if I have TSP buy an annuity with part of my TSP and I leave the balance in the TSP? How are taxes figured? A. Your annuity income will be taxable as ordinary income and you will be required to take RMD from the remaining TSP balance, which will also be taxed as ordinary income.