Q: If you chose the monthly payments option on withdrawing your TSP, can you also take a one-time lump-sum payment? A: Once you’ve initiated monthly payments, which are considered a form of full withdrawal, you can’t take a partial withdrawal.
Browsing: lump-sum payment
Q: In a recent response you said, “Your income will be taxed in the year in which it is constructively received.” What does that mean? If I retire on Dec. 31, 2010, and receive my last paycheck in January, which will include my lump-sum payment for terminal annual leave, isn’t that money taxed as income received in 2011? Will it not be shown as income on the W-2 for 2011, not 2010? A: It is not unusual for an employer to include income on the W-2 or 1099 for the year in which it was paid, even though the income…
Q: Let’s see if I’ve got this right. If I request monthly withdrawals from my Thrift Savings Plan account and change the amount each year, I’ll be able to receive a monthly check for life and still be able to build my principal, which I can pass on to my children or grandchildren. Does TSP have such a plan as this? What option is it and how does it work? If I need some emergency money, would I be able to make a withdrawal from my principal? A: You may request a full withdrawal as fixed monthly payments. You set…
Q: Since I’m not allowed to deposit my lump-sum annual leave check into my Thrift Savings Plan account, where’s the next best place to put it? Will this amount be considered part of my 2010 income regardless? A: Generally, I prefer the following order for retirement savings deposits: TSP, deductable individual retirement account, Roth IRA, taxable brokerage account. Your income will be taxable in the year in which you constructively receive it.
Q: I am 57 years old and I have 34 years of service, including 21 years of active duty in the Navy. I have already paid my military deposit amount in full. My Thrift Savings Plan account has $200,000 in it. If I retire next year, can I get half of that amount in lump sum, and can I invest the remaining $100,000 in an annuity? If I can, when would I start receiving the annuity? A: Yes, you may request a partial lump-sum withdrawal, if you have not already done so, and then later request a full withdrawal…
Q: A few months ago, I read something about federal workers being able to deposit the lump-sum payment for unused annual leave into their Thrift Savings Plan accounts when they retire. Did this happen, or is it just a proposal? A: A bill (HR 4865) was introduced in March that would allow this rollover, within certain limits, if passed into law. It is still in committee.