Q. Overview: I began in the Air Force Non-Appropriated Fund in 1996, enrolled in NAF retirement plan in 2000, ported to GS in 2005 with deferral of my NAF retirement (calculated at 5.27 yrs) and entered FERS. My current GS position will be abolished in 2014 (at nine years FERS). I have the potential of porting into a NAF position. I wish I had just retained NAF retirement, but lack of research and misguided human resources recommendations led me to where I am with a split retirement outlook. Given my FERS time will total only nine years at abolishment, if I move…
Browsing: VERA
Q. My wife retired under a Voluntary Early Retirement Authority in August 2011. Her 1099-R displays a “1” as the distribution code in Block 7 of the form, “no known exceptions.” For years 2011 and 2012, we paid a 10 percent tax penalty for early withdrawal from her Thrift Savings Plan. I know the tax is usually levied unless the person is 59½ years of age, but at what age will the code on the 1099-R change for my wife so we won’t have to pay this tax? Will she benefit at some point because her retirement was a VERA, and at…
Q. I am a letter carrier, age 52, started in 1985 and have 28 years of creditable service. If I understand what I’ve gleaned from the posts here and the Postal Service were to offer me a Voluntary Early Retirement Authority this year, 1. Would I begin my annuity immediately? 2. Would I have no reductions in calculations of my annuity? (average high-3 x 1 percent x 28) 3. Would I receive credit for half of my sick leave and all of my annual leave? (How are these applied?) 4. Would I receive the special retirement supplement beginning at age…
Q. I am a 53-year-old recent retiree (I was offered a Voluntary Early Retirement Authority through the Postal Service and accepted it). Is there a penalty to move my Thrift Savings Plan account to an immediate fixed annuity? If so, what would that penalty be? Additionally, I heard that within one year of retirement, my TSP account should be transferred to a civilian account (IRA, savings, etc.) What exactly is the time frame for that? A. The only penalty for using your TSP account to purchase an immediate fixed annuity in retirement is that you’ll be locking in historically low…
Q. I am taking the Voluntary Early Retirement Authority from the Postal Service and am trying to decide how to withdraw funds from my Thrift Savings Plan. I have about $300,000 in my account and have a mortgage of $150,000 with about 10 years until payoff. Should I take a lump sum and pay off my mortgage and keep the remaining money in TSP? Or should I just start withdrawing approximately $2,000 monthly to cover mortgage payments? I am afraid if I pay off my mortgage, the tax hit would be to great. A. I suggest that, as long as your mortgage…
Q. I retired as a FERS employee in July 2011 under a Voluntary Early Retirement Authority. I was 56½ with 28 years of service. During my years of employment, a Roth TSP option was not available. Therefore, all of my Thrift Savings Plan money is in a non-Roth/traditional account. I would like to use partial withdrawals to move this money into a Roth IRA. I know I must pay taxes but wondered if I must wait until I am 59½ to avoid penalty? I see references that a 10 percent penalty may not apply in the case of VERA and…
Q. I am taking the Postal Service Voluntary Early Retirement Authority on Jan. 31. I’ll be 56 then. I’d like to take a full withdrawal from my Thrift Savings Plan in monthly payments and then possibly roll the balance into an IRA at age 59½. I understand that 20 percent will be withheld automatically from my monthly payments for taxes. If I withdraw the balance a few years later, will the 20 percent figure still apply, or can I roll it into the IRA without the tax hit?
Q. The Internal Revenue Service is penalizing me for withdrawing my Thrift Savings Plan. I am less than 59 years old, but I retired under a Voluntary Early Retirement Authority. It is my understanding that I do not have to pay an early withdrawal penalty because I am retired. Please correct me if I am wrong. I also need to find the regulations for the IRS if I am exempt from paying this penalty. A. Unless you retired during or after the year in which you reached age 55, or meet one of the other special exceptions, your withdrawals will…
Q. If I receive a Voluntary Early Retirement Authority from the U.S. Postal Service, can I take a lump-sum withdrawal from my Thrift Savings Plan without paying a penalty? I am 57 years old with 27 years of service. A. Yes.
Q. I will be taking voluntary early retirement July 31. I have plans to take my money out of TSP to pay off bills and buy a home. Would it be better to wait until next year to pull out since I will be in a lower tax bracket? A. While it’s nice to reduce the tax liability on your withdrawals, the size of any advantage you’ll enjoy from waiting will depend on how much income is ultimately exposed to lower tax rates. Once the potential tax benefit from delaying the withdrawal is determined, it needs to be weighed against…