Q. I am concerned about the fiscal cliff. Should I borrow from my Thrift Savings Plan to cover future bills? I have about one month of savings, but beyond that, my family will not make it. I can always pay it back in full if a bargain is reached. Just not sure what to do. A. It doesn’t sound like you have a choice.
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Q. I’m pretty pleased with the Thrift Savings Plan returns and would like to know if I can deposit any after-tax money into the TSP. If I have a $100,000 in a CD, can I withdraw those funds (and pay the taxes) and deposit them into my current TSP account? A. No, but you may transfer your 401(k) assets into your TSP account if all of the money in it is taxable upon withdrawal. Use Form TSP-60 and follow the instructions there.
Q. Can a retiree withdraw money from the Thrift Savings Plan more than once? How many times? A. You are allowed one partial withdrawal and one full withdrawal per lifetime. The full withdrawal can be taken as a series of monthly payments, which you can terminate with a lump sum distribution of the remainder. The withdrawal limits are clearly explained at www.tsp.gov.
Q. I involuntary separated from federal employment due to a reduction in force at age 53. I receive a small FERS monthly annuity. I am now 59½, and I would like to withdraw $25,000 from my Thrift Savings Plan, which I have never touched. I will have to pay taxes, but will this withdrawal be subject to the 10 percent penalty at my age? A. No.
Q. My husband (retired FERS) turned 70 in March and has more than $200,000 in the Thrift Savings Plan. Our understanding is that he must begin withdrawal by April 2013. We owe $100,000 on our home. Is it better to take out enough to pay off the house or schedule the minimum monthly withdrawal? A. The smart move will depend upon your mortgage terms and how you manage the TSP money. If I were responsible for the outcome, I’d prefer to see you continue the mortgage, if it’s at a market fixed rate, and take the required minimum distribution from the TSP account.
Q. I’ve been retired from the post office for a couple of years now and have left all of what’s in my Thrift Savings Plan account in the G Fund. I won’t be forced to take the required minimum distribution until about six years from now. Since I’m not an expert at investing in all of the different funds, I was wondering: Would it be a good idea to transfer my money into one of the L Funds until I have to start taking withdrawals? A. Yes.
Q. I am CSRS and eligible to retire now with 30 years at age 56. My salary excludes my wife and I from funding a Roth with more than $6,000 each year (except $22,500 allowable into new Roth TSP). Let’s say I put $25,000 into the Voluntary Contributions Program with the intention of making a one-time, lump-sum withdrawal as soon as possible and roll the original $25,000 into a private Roth IRA. I am told that doing so is a way to immediately fund a Roth that is not limited to my current $6,000 amount mentioned above. Do I understand this correctly,…
Q. Can I select the date my TSP monthly withdrawal is deposited to my bank account, or is it the same date for everyone? A. You can’t specify the date.
Q. I’m a Postal Service employee who is very close to his retirement date. I was told that withdrawing 4 percent of my Thrift Savings Plan savings per year would last for a lifetime? Is this true? What if I die two years after I begin to draw and my benefits are left for my daughter who is only 38 now? Will she receive the money for a lifetime also? Or will she be paid only the balance? A. You can’t be sure that a 4 percent annual withdrawal rate will be safe. It depends upon a number of factors, including…
Q. I’m 60 years old and receiving a full Thrift Savings Plan annuity at set monthly payments. For 2013, I want to increase the payments using Form TSP 73 to cover anticipated expenses for a family wedding. The following year, I want to again submit TSP 73 to significantly lower my payment for 2014, as I will have some anticipated income and won’t need the extra money. Other than the $50 minimal monthly withdrawal amount, are there any dollar restrictions in setting the monthly withdrawal amounts year to year? A. Just to be clear, you are receiving automatic monthly payments from your…