By Mike Miles
December 3rd, 2012 | Uncategorized
Q. In 2011, following 18 years of government service at age 60, my excepted service position ended unexpectedly. My retirement pension is small: $589. My first payment arrived February. I had $10,000 in savings with Fidelity but used that to live on, considering the lack of income for two to three months and basic living requirements: mortgage, insurance, car payments, son leaving for college, etc.
I paid taxes on that money, approximately $3,000 or more. That money is now gone.
When I retired, I had two Thrift Savings Plan loans that were rolled in as income on my taxes. They are paid in full.
I am still seeking full-time employment. I have a part-time job that has been extending me extra hours.
My TSP account has approximately $80,000 remaining. Should I roll that over to an IRA? Am I able to borrow from that account to pay off bills? I have approximately $13,000 in bills: car, three credit card accounts (none over $3,000). This does not include mortgage/homeowners’ association/condo fees, water, electric, home-car insurance, food, etc.
I hope to work until 66 before applying for Social Security. I have one child in grad school who constantly needs financial assistance. What’s the best for me to do?
A. You should avoid moving your TSP money to an IRA, since you’ll lose it’s low-cost advantage and access to the G Fund. You may not borrow from your TSP account since you are no longer eligible to contribute. You may initiate automatic monthly distributions from your TSP account and then change the amount of those distributions once each year. Visit www.tsp.gov for more information.