Q. I am 54 years old with 33 years of federal service, 27 in the Postal Service and six as a military buyback. If the USPS offers voluntary early retirement, Iwould take it; but I have an outstanding loan with my TSP and not enough cash or credit for a loan to pay it off. How would this work? May I use my TSP to pay it back, and would I be able to withdraw funds from TSP, even with the 10 percent tax penalty? How does TSP figure what has been paid in and what is interest accrued, and…
Browsing: TSP withdrawal
Q. I cashed out $12,000 from my TSP in 2011 and listed it on my tax return as income — and paid income tax on it. Now H&R block is saying I was supposed to pay a penalty on the withdrawal. About five years ago, I cashed out about $10,0000 and don’t remember paying a penalty. I called the IRS and they were clueless. I am 56 years old and don’t retire for about four to five years. I am again contributing to my TSP. Do you know if I was supposed to pay a penalty to the IRS? A.…
Q. I am civil service, with more than 17 years of federal service, in FERS, and approaching 59½ and would like to withdraw 50-75 percent of my TSP and roll the full amount over into my Roth IRA account. I would leave 25 percent in my TSP and let it continue to grow for my remaining time in federal service. How do I go about doing this, if I can? Does this make financial sense to do this? I plan on retiring at age 62; Dec. 31, 2014. A. You may take an age-based in service withdrawal once you reach…
Q. I am a FERS retiree from the federal government in March 2011. I received the VERA/VSIP in a lump sum of $25,000 ($18,000 after taxes). In July, I withdrew a lump sum from my TSP to pay off my mortgage, that amount was also taxed. Since the lump sums I received were taxed already, how is it that I have to claim them as income? I am preparing my 2011 taxes and those lump-sum payments make it appear that I earned more than $100,000 in 2011. It seems to me that I am paying taxes twice on the money.…
Q: I plan on retiring at 62 from the Federal Employees Retirement System. Will I be penalized for withdrawing money from my Thrift Savings Plan account at that age? A: No.
Q: I have looked all over the Thrift Savings Plan website and cannot find the button to push that says I am retiring and want to start collecting my money. I am almost 62 and intend to retire in 191 days. I have figured out that I want to begin receiving my money on a monthly basis and can only change that election once a year. The online calculator tells me that amount is good for 60 years and four months. It does not tell me how far off the minimum distribution I am. But where is the button? A:…
Q: I’m currently contributing to the 2050L fund of the Thrift Savings Plan. Is it possible to transfer my TSP funds to a Roth individual retirement account without getting penalized? I don’t want to touch the money, I just want to invest in precious metals instead of Fortune 500 companies and small businesses. A: If you are age 59 1/2 or older, you may take one age-based in-service withdrawal from your TSP account. Check with a CPA (ideally, the one who will be preparing your tax return for the year) for advice on converting it to a Roth IRA.
Q: Are FERS 6c retirees considered retired public safety officers by the IRS for the purposes of tax reporting? I am a retiree with 20 years of service, but under age 59 ½. Most of my career was a GS-2181 customs officer/pilot, but they changed us to 1877 air-interdiction-agent pilots just prior to my retirement. I would like to take the one-time disbursement from TSP and avoid the 10 percent penalty, but I am unsure if federal law enforcement is considered public safety officers under IRS rules. A: If you retired during or after the calendar year in which you…
Q: At age 59 ½ I took a withdrawal from TSP. It was not a loan. I borrow because I could at age 59 ½. I am now about to retire at a age 65. How can I get the rest of my money out of TSP? I have to take a lump sum, correct? A: You’ll have to take a full withdrawal, which can include monthly payments.
Q. I am currently a GS-9, Step 1. So let’s say that when I retire, I would be a GS-15. How will my Thrift Savings Plan withdrawals be affected by the tax bracket based on my current 15 percent and, let’s say, 28 percent. A. Your TSP withdrawals will not be affected by your tax bracket. Your tax bracket may be affected by your TSP withdrawals, however. When you withdraw money from TSP, the amount withdrawn during the year is added to your gross income for that year. It is considered ordinary income. If you withdraw enough money to increase your total…