Browsing: TSP

Q: If I retire from the Foreign Service this year at age 50, I would like to continue to save for the traditional retirement years (after age 70). What is the best way to do that?  Can I contribute to my Thrift Savings Plan for years to come via IRA transfers using form TSP-U-60? If so, are there constraints? A: The best way to save will depend upon your circumstances and goals. There is no correct, one-size-fits-all answer. Under current rules, you may continue to move money into your TSP account from an IRA account, indefinitely, with no limit. Keep…

Q: I retired last year under the Civil Service Retirement System and have read that the rules for Roth IRAs have changed. Can I roll over my Thrift Savings Plan money to a Roth IRA in order to reap the tax-free benefits down the road? I’m 61, and will not be eligible for Social Security. If I can roll over the money, is there a limit as to how much? A: You may convert your TSP funds to a Roth IRA and there is no limit on the amount. However, you should carefully consider whether this would be in your…

Q: Do you know of any provisions in the Federal Erroneous Retirement Coverage Corrections Act that allows one to get a Thrift Savings Plan loan with agency matching funds in their TSP account? In April, while employed with the Department of the Army, the Army Benefit Center informed me that I was entitled to retirement plan corrective action under FERCCA. In July, I submitted my FERCCA election form to enroll me into Civil Service Retirement System Offset retirement coverage from the Federal Employees Retirement System. ABC sent letters to my previous employers notifying them of this change and informing them…

Q: Can I retire and leave my savings in the Thrift Savings Plan? If yes, will there be a service charge? Will the account grow if I switch to the G Fund (government bonds)? A: Yes, you may — and I generally recommend that participants do — leave your money in the TSP after you separate from service. There are no “service” charges, just the extremely low expenses of running the program that apply to all participants. The G Fund is not really a bond fund. It’s a guaranteed income contract with a stable share value and interest paid based…

Q. If I take a deferred retirement at age 60 (I’m 48 now with 23 years of FERS service), can I buy an immediate Thrift Savings Plan annuity through Met Life without a penalty? A. Yes, as long as it’s a life annuity.

Q. Starting about October 2008, I’ve read and heard opinionators state that based on the country’s poor economic situation and long-term market performance, e.g., the performance of the S&P 500 index over the past 10 years, that strategies, such as “buy and hold” low-cost, tax-advantaged, index funds such as TSP’s C, F, S, and I funds, “dollar-cost averaging,” and invest for the “long term”, are no longer valid ways to invest and save for one’s future retirement. Could you share your opinion on the whether we’re in a “new paradigm” (and what is it?) and whether the “average, unsophisticated investor”…

Q: My 2010 “annual” required minimum distribution from my Thrift Savings Plan will be approximately $8,500 (about $710 per month). My “monthly” withdrawals will be $2,000.00. If I roll over to a Roth IRA that part of my withdrawal that exceeds my required minimum distribution, can I start deposits to my IRA of $1,290 in January and each month after that, or do I have to wait until May, at which time my entire “annual” required minimum distribution will be met before I can make deposits to my Roth IRA? A: The limits are annual limits, so what matters is…

Q: After contributing $22,000, including age 50 catch-up contributions, in calendar year 2009, may I also contribute $6,000 to a traditional (nondeductable) IRA, which includes the standard $5,000 plus $1,000 age 50 catch-up? A: Your participation in the Thrift Savings Plan should not prohibit you from making the maximum nondeductible contributions to a traditional IRA in 2009.

Q: I regret that I can’t remember where, but I read that legislation or an amendment was being considered that would allow Voluntary Contribution Program funds to be transferred at retirement to a Thrift Savings Plan account. If this is the case, would there be a cap on what could be transferred? A: Currently, you may direct that the interest portion of your VC account be transferred to your TSP account, but not the principal. I can’t predict what may or may not be permitted in the future, or what limits might apply.

Q: I will be retiring on Jan. 1. I recently contributed $50,000 to my Voluntary Contribution account. This is my first contribution to this account, and upon retirement I would like to transfer the entire balance directly to a Roth IRA. I have an existing Traditional IRA (never taxed and balance of approximately $65,000) and a Thrift Savings Plan account of approximately $245,000. My goal is to transfer the entire amount of my voluntary contibution directly to an existing Roth IRA upon retirement. My thought is that the only tax I would owe on this conversion would be the few…