Ask The Experts: Money Matters

By Mike Miles

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 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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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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Withdrawal after retirement

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Q. I am an operations manager for the FAA covered under CSRS. I plan to retire Dec. 31, 2016, at the age of 55 with 34 years of service under the controller bill. Can I make a total withdrawal from my TSP in 2017 without paying the 10 percent early withdrawal penalty?

A. Yes.

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Default on TSP loan

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Q. I am three years away from retiring (active-duty military officer) and have some credit card debt I would like to pay off before leaving active duty. I am not eligible for a TSP hardship withdrawal because of my income. What would happen if I take out a TSP loan and intentionally not pay it back? I understand I would be responsible for it becoming a taxable distribution and a 10 percent early withdrawal fee, but would there be any other negative effects against me or my credit? Would it even be ethical? Read the rest of this entry »

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TSP residential loan

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Q. What happens if the down payment made is less than the amount of a TSP residential loan? Would the borrower have to claim the difference as a withdrawal and pay the penalty and claim as income?

A. I don’t believe that there is a requirement to commit the entire loan to the down payment, but you should consult your tax preparer to be sure.

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TSP rollover

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Q. At age 57, can I pull all my TSP out and roll it over into a primary house without paying tax?

A. No.

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Rollover limit

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Q. I know partial withdrawals are limited to one in retirement under TSP. Does this apply to rollovers as well? I want to top off my marginal federal tax bracket each year until I hit 70-½ by doing a TSP rollover of a varying amount to my existing external Roth account. If I have to use the monthly payment option to do it, it’s just too much trouble.

A. Only one lump-sum TSP withdrawal or rollover is allowed per lifetime.

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Withdrawals and tranfers

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Q. I plan on retiring with 31 years of service at age 57. I have both the Regular TSP and the Roth TSP. I plan to withdraw my Thrift Savings Plan in a single payment. Can I transfer 100 percent of the Regular TSP to a Traditional IRA, but take the Roth TSP funds as a direct withdrawal without penalty?

A. I believe so, as long as you have held the Roth account for at least five years. You should consult a tax adviser for specific advice before you proceed.

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