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.
Q: As I understand the Voluntary Contribution Plan, eligible employees can start making deposits at any time prior to retirement. At retirement, they can choose to withdraw the funds or purchase a VCP annuity. Am I correct that after age 59 1/2, I can make a taxable withdrawal from my Thrift Savings Plan and deposit that money into the VCP to be used to purchase a VCP annuity upon retirement? A: Yes. The VCP doesn’t care where you get the money to make the deposit, as long as it is after-tax money.
Q: Assume that I am 67 years of age and have 42½ years creditable service under the Civil Service Retirement System. Assume that I have “maxed out” at the highest grade/step on the current GS pay schedule for my locality area. Assume that I plan to continue employment until at least December 2011. Assume that I am married and have no children. Assume that I have a current balance in the Thrift Savings Plan in excess of $375,000 and have completed my TSP contributions ($22,000) for 2011. Assume that I have no current monetary obligations of age greater than 30…
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.