Q. Quite a few of us here in Afghanistan believe the new Roth IRA is an excellent investment. We are contributing tax-free money to receive tax-free contributions and earnings after we retire and meet withdrawal criteria. We leave Afghanistan in late February. Since we have been in a combat zone for two months, we plan to max out the Roth as much as possible. If we are able to max the Roth at $17,000, how much may we contribute to the traditional TSP/Roth TSP for the rest of the year? A. The TSP contribution limit applies to all of your TSP…
Browsing: withdrawal
Q. I am 72. My wife is 62. I get $1,700 a month in pension and $1,700 a month in Social Security. My wife gets $5,800 in pension. We put $70,000 in a mutual fund three years ago. It is now $80,000. I would like to take out $20,000 a year. I have health problems. Good idea or not? A. You have the “idea” of spending money that you’ve saved and invested in mutual funds, and you want to know if your idea is a good one? That’s like asking if your idea to eat the leftover birthday cake is…
Q. I am retired (68 years old) under CSRS. We are thinking of refinancing our home and paying off the line of credit. If we include the settlement fees, we will be saving $5,474 per year, recouping our settlement fee within 1½ years. However, if we refinance without including the fees, we will be saving $5,916 per year. My husband wants to draw $8,000 from either his 401(k) (he is 68 also), or draw $4,000 from his 401(k) and my Thrift Savings Plan. I don’t want to touch these for a $42 a year savings. Are there drawbacks at our age to taking…
Q. I am in under FERS. If I retire after 30 years of federal service at age 58, can I start withdrawing my Thrift Savings Plan, or do I have to wait until I am 59½? I do not have any part of the TSP as a Roth. A. Under the circumstances you describe, you may begin withdrawals without penalty.
Q. Is there any way to manage one’s Thrift Savings Plan account so as to effect a bucket strategy of withdrawal? My reasoning is that not all funds will be up in any one year. I would like to have a three-to-five-year bucket (G Fund) for the lifetime monthly withdrawals and a six-to-10-year bucket for asset growth (C, S and I funds). Periodically, I would move money from the longer-term bucket to the shorter-term bucket. As it stands now, withdrawals come out of each fund based on the percentage in each. My reasoning is that the rock bottom expense ratios…
Q. I received a packet from my previous employer that I needed to cash out or roll over my funds to an IRA or another retirement fund. I’m 48 years old. Where can I put this fund without having to pay a broker or a financial adviser fee? Is there a fund that I can roll this into without upfront fees or an annual fee? A. The best place for this money is your Thrift Savings Plan account. You can use form TSP-60 to request the transfer.
Q. I am a retired CSRS employee, age 62. I am considering converting my Thrift Savings Plan balance of about $205,000 to an IRA with Fidelity. What are the advantages and disadvantages of making this conversion? What considerations should I look at? A. The disadvantages include higher costs, greater complexity and the loss of access to the G Fund. The advantage might be more flexible withdrawal options. I recommend against this move unless, for some reason, you have no choice.
Q. I plan to retire in nine years (at 63). I have $176,000 in the Thrift Savings Plan. I add the maximum to the TSP every year ($22,500) and will continue that until I retire. Then, my strategy, once retired, is to withdraw a monthly income from my TSP, and I will then start adding that money to a Roth IRA (e.g., a Vanguard fund) until I max out the Roth for both my husband and me. My thought is that I am getting a tax break by adding the max to the TSP during my high-income years as a…
Q. My wife has 12 years of FERS service at the age of 62. She is eligible to retire. Can she withdraw the full amount from her Thrift Savings Plan without penalty? A. Yes.
Q. I am going on 72, working for the Postal Service, contributing to the Thrift Savings Plan and paying off a loan. Do I have to start the age-based withdrawal? If I do, how do I contribute and withdraw at the same time? My health is good, and I don’t feel like quitting at this time. A. You don’t have begin taking Required Minimum Distributions from your TSP account until after you’ve retired.