Ask The Experts: Money Matters

By Mike Miles

Maximum contribution

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Q. I am in the National Guard and I am a civil service employee. Is the annual maximum contribution for the TSP the combination of the two, or is it for each individual account? Can I contribute in 2014 $17,500 to my Guard TSP, then $17,500 to my civilian TSP account as well?

A. Unless there is a special exception for Guard pay, the limit is combined.

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TSP withdrawal

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Q. If I retire in December under MRA +10 and I’m 59 years old, how long do I have to wait to request a full withdrawal with monthly payments? Also, can I request the same day to take a partial lump-sum withdrawal, or do I have to do them separate? Read the rest of this entry »

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TSP beneficiary

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Q. I saw your response to  a TSP question about what happens to an account that is giving monthly payments (not annuity) when you die; payments stop and remaining funds go to the beneficiary. If your beneficiary (wife) also has a TSP account, are there any ways to transfer that to her TSP vs. lump payout if you die? Read the rest of this entry »

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TSP loan repayment

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Q. From what I understand, I must repay a TSP loan within 90 days of the date my agency notifies TSP of my separation from service, otherwise my loan is taxable. When does the agency notify TSP of my separation, upon retirement?

A. You’ll have to ask your agency’s benefits officer.

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TSP withdrawal options

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Q. I am under FERS and contribute the maximum amount into TSP. When I am eligible to retire (57-1/2), do I have to immediately start collecting out of my TSP once retired, or can I roll it over into another bank or institution into a 401K without penalty? And how does one receive payments if I can’t roll it over? Read the rest of this entry »

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Fund allocation

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Q. I am a FERS employee and plan to retire in December 2015 at age 68-1/2 with 30 years, nine months of government service. I presently invest my TSP with G Fund 60%, F Fund 10%, C Fund 10%, S Fund 10% and I Fund 10%. Should I switch the money out of the G Fund and invest in C Fund 60%, S Fund 20% and I Fund 20%, as they seem to be doing so much better than the G Fund? Read the rest of this entry »

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Lump sum, earned income

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Q. I’ll retire under FERS at the end of this year. Will the lump-sum payment for annual leave that I’ll receive early in 2015 would be considered earned income for the purposes of being able to contribute to my non-TSP Roth IRA?

A. No.

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L Fund recommendation

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Q. You recommend  that if we do not feel comfortable managing our TSP,  we should  invest in the L Fund that most closely corresponds to our life expectancy. However, the L Funds are named for the year we expect to start withdrawing money, not the year we expect to expire. I expect that I will not be withdrawing much money the year I expire, and certainly none afterwards. So why do you word your advice that way? Read the rest of this entry »

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Loan down payment

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Q. I am a FERS employee eligible for a TSP residential loan of $23,000. If I request this amount for a primary-residence home purchase, would my down payment and closing cost need to be at or above this amount of $23,000 on my signed purchase contract? Not sure if I will put down 5 percent (13K) or 10 percent (26K). If I put 5 percent on purchase contract, will TSP decline the request for the full $23, 000 loan? I don’t want to write 10 percent on purchase contract if I am not going to put quite that much down, however I’m worried if I only say 5 percent that the loan won’t be approved for $23,000. Can you please explain? I could not find anything in the loan documents on this topic. Read the rest of this entry »

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Withdrawal penalty?

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Q. I recently retired under CSRS. I am 57. I would like to take a partial withdrawal from my TSP. What penalties and taxes will I have to pay on the amount I withdraw.

A. As long as you retired during or after the year in which you reached age 55, there will be no early withdrawal penalty due. There will be 20 percent mandatory withholding taken from your payment, however, unless you roll the money over directly to an IRA.

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