Browsing: thrift savings plan

Q: I have five years of military service that I am considering applying to my federal retirement years. I have waited way to long to do this and am hoping I could use my Thrift Savings Plan monies to pay for the military service, similar to rolling over an individual retirement account. Is this possible? A: A rollover to the Federal Employees Retirement System or the Civil Service Retirement System for service is not allowed.

Q: I will be rebalancing my portfolio biannually to the initial allocation until I reach an age that justifies a change to a more conservative approach. To complete this action, do I process both an interfund transfer and a contribution allocation? Is biannually OK? A: You’re asking for specific, individual investment advice, which I can’t provide through this forum. In general, I recommend that Thrift Savings Plan investors using this do-it-yourself strategy set the contribution allocation to 100 percent G Fund and then periodically rebalance the existing assets to their selected allocation. I recommend that you rebalance no more frequently…

Q: I withdrew money from my Thrift Savings Plan and now it’s tax time, so we have to pay quite a bit. Will I be able to change the Code 1 into an “L” on Form 1099 so we do not have to pay so much in taxes? A: No, you can’t just change the code on a 1099 to avoid paying taxes or penalties. If you took an early distribution and don’t meet one of the IRS exceptions, you’ll owe the penalty. Maybe you should consult a CPA before filing your return.

Q: Can you run through a few scenarios with different annuity rates? [The Thrift Savings Plan annuity interest rate of] 3.625 percent is a fairly low rate to lock in for the long term, especially with inflation. How does the monthly annuity distribution look as interest rates change? For example, what would the distribution be for $100,000 at 5 percent, 10 percent or higher? The TSP annuity calculator doesn’t give me the ability to run these scenarios. A: I won’t run rates for you, but you can estimate the payments with a calculator and the knowledge that the payment will…

Q: I realize that you can leave your funds in the Thrift Savings Plan until age 70 1/2. But can you continue to contribute to the plan in retirement? If so, how? Can you have a certain amount taken out of your retirement check? If not, what is the advantage of keeping the money in the plan? Wouldn’t it be better to take it out when you retire, reinvest it and continue to contribute to the new fund until you need the money? A: You can’t continue to contribute to the TSP after you separate from service. You can transfer…

Q: If I retire May 1 at age 55 under the Civil Service Retirement System with 34 years of service, can I leave my $60,000 in the Thrift Savings Plan for a year or two and then, after seeing how life as a retiree goes, start up periodic payments? Or do I have to decide what to do with my TSP account right away? A: You can delay the decision for as long as you like. You won’t have to start taking withdrawals until you reach age 70 1/2.

Q: I saw the following comment in response to the question regarding the Thrift Savings Plan annuity rate being 3.625 percent: “The annuity rate is used to determine, at the time of purchase, the size of the payment you’ll receive in exchange for the annuity purchase price.” My question is surrounding the phrase “annuity purchase price.” Are you telling us that after all the years of contributing our own, hard-earned money into the TSP to secure a better retirement life for ourselves and our families, that we have to buy back that money from the TSP in order to use…

Q: I was reading a question submitted to you about the Thrift Savings Plan annuity rate being 3.625 percent. What does this rate have to with withdrawing from our accounts in retirement in the form of an annuity? If I have $200,000 in my account and buy an annuity with it, once it is purchased I get the monthly amount for the rest of my life, Right? I don’t understand what this annuity rate is for. A: The annuity rate is used to determine, at the time of purchase, the size of the payment you’ll receive in exchange for the…

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