Q: I was told that if you withdraw money from your Thrift Savings Plan account, you are subject to a 20 percent fee and then also subject to pay taxes on the money as income at the end of the year. A: There is no fee to withdraw from your TSP account. Under certain circumstances, there will be a tax deposit withheld from your withdrawn amount, which will be credited against your tax bill for the year.
Browsing: withdrawal
Q: What are the options of drawing out money from my Thrift Savings Plan when I retire? Can I draw monthly payments without buying an annuity and leave the majority invested? A: You have a number of options for withdrawing the money, including partial and full withdrawals. The details are explained in the materials available here. You may elect monthly withdrawals, which are a form of full withdrawal, without buying an annuity, and continue to invest the remaining account value as you choose.
Q: I am no longer employed and have reached age 70½. I received notice from the Thrift Savings Plan that I have to remove my money or start taking monthly payments, buy an annuity, or some combination of removing my money and buying an annuity. I know about the Required Minimum Distribution and was fully prepared to take that amount out. Am I not able to leave the remainder of my account intact after I take the Required Minimum Distribution? This is really a shock to me if I have to remove the money and pay taxes on it, or…
Q: I am a postal worker for 23-plus years of service. I am 45 years old. Is there a way to withdraw all my Thrift Savings Plan funds without penalties? If I can do this, I can bring down my mortgage and not be in a foreclosure situation. I do remember that President Obama, in his campaigning days, promised we could withdraw from our retirement funds. What happened to that? A: As an active employee, you would only be able to withdraw funds from your TSP account under the financial hardship allowance. Your withdrawal will be subject to penalty, however,…
Q: I am retiring Dec. 31, 2010. I will be 55 years and 11 months old with 35 years of service. I would like to leave my Thrift Savings Plan monies, but make one withdrawal only and leave the rest until I either have to take withdrawals or need additional income to supplement my pension. Can I make the one withdrawal without paying the 10 percent penalty? A: Under the circumstances you describe, you will be allowed one partial withdrawal after you retire, without penalty. You may then take a full withdrawal — either in monthly payments or a lump…
Q: Could you elaborate on a couple of statements you made in your “Mistakes to Avoid” column that appeared in the July 13 issue of Federal Times? At mistake No. 2, “not having enough insurance,” you said “Once you are retired, long-term care insurance is a prudent thing to consider.” Many feds signed up for the federal long-term care insurance program when it first became available years ago. Are you saying that most of us workers don’t need to get long-term care coverage until we’re actually retired? You stated “Many people follow this rule of thumb: ‘It’s generally safe to…