Q. I plan to retire from the federal government in the near future (I will have 32 years). I wish to pay my house off ($74,000) with my Thrift Savings Plan earnings. Is this a good idea? The interest rate on my house is 5.75 percent, and I realize that 20 percent will be taxed when I decide to withdraw from TSP. Should I transfer to an outside facility? I do not wish to have a house payment when I retire. A. It’s impossible to say whether this is a good idea for you without understanding and analysis beyond the…
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Q. As a federal law enforcement officer facing mandatory retirement in 2013, I have been looking closely at my Thrift Savings Plan withdrawal options. When I retire and I leave my complete TSP balance in the G Fund, can I request withdrawals whenever I want and for whatever amount I want? I see that there are options for setting up a recurring amount each month or year, but can that be changed to month to month or whenever it is needed? For example, because receiving my full retirement pension amount in a timely manner will most assuredly not happen, would…
Q. I retired as a CSRS employee after 31 years of service. I will be 70½ in June and, as I understand, I will have to begin taking out from my Thrift Savings Plan account then. If I am reading the information correctly, I have until April 2013 to do this. If so, when is the deadline for me to send in my request for withdrawals? Also, I have checked the TSP forms on the website but could not determine the appropriate one to use. I am planning to take out my TSP savings in monthly withdrawals. A. Your first required…
Q. I am 62 and last year (taxable 2011) withdrew my Thrift Savings Plan in a lump sum. Taxes of 20 percent were taken out. But on computing taxes this year, I was a bit surprised with the resulting tax bite. Adding in the lump sum doubled my income and pushed me into the 28 percent bracket. I know we no longer have income averaging, but is there anything I might have missed that might smooth out this one-year spike in income? A. Not that I’m immediately aware of, but you should run the question past your tax preparer.
Q. I recently transferred my “entire” traditional Individual Retirement Account from Fidelity to the Thrift Savings Plan. When I started the IRA in 1983, I opened it with pretax money. From that, there was a front load cost. To the best of my knowledge, they rolled all of it over. How does that affect the tax situation? Is that previously taxed money identified? A. When you moved it into the TSP, you signed a statement that it was all pretax money. It will all be taxed as ordinary income when withdrawn.
Q. I have worked for the Postal Service for 24 years as postmaster. I would be able to take an early-out offer. I want to borrow on my Thrift Savings Plan for a residential loan. If I do a 10-year loan from my part of the TSP next month and then they offer early retirement and I take it, will I still have to continue making the payments? Also, when I retire, will I be able to pull out all my savings in TSP? A. If you retire, your outstanding TSP loan will become due. If you don’t repay it…
Q. I am a federal civilian under the FERS system with less than 10 years of civil service. I am also a military reservist with 25 years of military service. I am not yet 50 years old and I do not intend to retire or separate from federal service in the next few years. I want to cease contribution to and close my TSP account, withdraw the entire amount immediately by rolling it over into a tradional IRA not associated with the government. I am unconcerned about any penalty I may have to pay. I could not find in any…
Q. I retired at the end of 2011 as a Federal Employees Retirement System employee. To get most of my retirement, I needed to redeposit for several years of military service, and also for a period of prior federal service. Because I did not have the money to pay it at the time, nor did I want to remain working until I could amass that amount, I withdrew my Thrift Savings Plan at age 59½ and paid most of the money to the Office of Personnel Management. The amount it withheld for taxes was in excess of the amount I…
Q. I am a 57-year-old retiree. I retired two years ago. Our daughter is getting married, and I would like to help her with $15,000 for the wedding coming up later this year. We have just over $100,000 in our Thrift Savings Plan account. We know we can only make a one-time withdrawal before we’re 59½ years of age without a penalty. So if we make a one-time partial withdrawal this year, we will not be able to make another withdrawal without penalty charges until after we are 59½. Would it be wiser to take out a $15,000 loan or make a partial TSP…
Q. I read a question regarding TSP. You stated that if the TSP is used for purchasing a home, the money would be taxed. In other words, they are telling you how to spend your hard-earned money. I would like to think that I could spend my money any way I desired. Please tell me if there are restrictions on how to spend my money? A. All money that is withdrawn from the the TSP is taxed as ordinary income.