By Mike Miles
Refinancing and VCP
February 11th, 2013 | Uncategorized
Q. I am a 59-year-old federal employee with 34 years of service under CSRS. I am retiring soon and heard about the Voluntary Contributions Program. I don’t have a wad of cash except accessing some of the equity in my home (I have about $200,000 of equity, and I could pull up to $100,000 out). Is it worth refinancing (at a low 3.5 percent) to access the money and use the VCP to convert it into a Roth IRA?
A. Probably not, unless you need the cash for expenses.
Tags: conversion rule, CSRS, retirement, Roth IRA, voluntary contributions program
Roll over TSP to Roth TSP?
December 14th, 2012 | Uncategorized
Q. Can I roll over the funds in my traditional Thrift Savings Plan to the Roth TSP? I thought I had read that you couldn’t, but I see where you can roll over from a 401 plan, so it would make sense and just pay the taxes this year on the whole amount.
A. You may not convert traditional TSP to Roth TSP money.
Tags: conversion rule, rollover, Roth TSP, taxes, TSP
Converting TSP to annuity
December 10th, 2012 | Uncategorized
Q. I am a U.S. Capitol Police officer. I plan to retire in 2014 at age 55, although I can stay until 57. If I convert my TSP funds to an annuity, will I be able to draw on it right away? If not, when? Will I be penalized prior to age 62?
A. If you retire during or after the calendar year in which you reach age 55, you will be exempt from the early withdrawal penalty for all of your TSP assets as you withdraw them and may take them within the usual TSP limits, including using some or all of the money to buy an immediate annuity.
Tags: annuity, conversion rule, early withdrawal penalty, law enforcement, retirement, TSP
Avoiding the Roth IRA aggregation rule
August 2nd, 2010 | Uncategorized
Q: I am a federal employee with $60,000 in my nondeductible individual retirement account. I plan to convert it to a Roth IRA this year. I also have $120,000 in my traditional IRA which I do not plan to convert to Roth this year.
To avoid the Roth conversion aggregation rule, my plan is to roll the $120,000 into my Thrift Savings Plan account before converting my nondeductible account to a Roth IRA. This way, the $120,000 will not be subject to the Roth conversion aggregation rule this year. Is this a valid way to avoid the rule?
A: I believe that this will work, but I’m concerned about the timing, with both actions taking place in the same tax year. You should consult a certified public accountant for specific advice before proceeding.
Tags: conversion aggregation rule, conversion rule, Individual Retirement Account, IRA, Roth IRA, thrift savings plan, TSP