Social Security and tax deductions from annuity and TSP

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Q. When I retire, I will be 59½ and will have 30 years of service at the Postal Service. I will not have any earned income from that point on. I understand federal and state taxes will be taken out of my FERS annuity and any money I take out of my Thrift Savings Plan. Will I also have Social Security deducted from these two sources? Also, will my special retirement supplement and — when I turn 62, my SSI benefit — also be subject to federal and state taxes?

A. Mike: Your TSP withdrawals are subject to income taxation, but no employment taxes, like Social Security, Medicare or unemployment insurance.

Reg: Your special retirement supplement will be treated as ordinary income. To find out to what extent your Social Security will be taxable, see IRS Publication 721.

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Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to fedexperts@federaltimes.com and view his blog at money.federaltimes.com.

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