By Mike Miles
Rehired annuitant covered only by Social Security
February 4th, 2013 | Uncategorized
Q. My wife was RIFed in 2008 at age 48 with 28 years of service with a $7,000 Thrift Savings Plan balance and was placed on CSRS discontinued service retirement. She was re-employed by the government five months later with a different agency. Because she is a re-employed annuitant, she can no longer contribute to TSP and is covered by Social Security’s Old Age, Survivors and Disability Insurance only. Emails and telephone calls to TSP have proved less than helpful; TSP has advised her that the only action possible is to leave the fund as is. We both wanted to verify TSP’s advice.
A. From the bulletin available at https://www.tsp.gov/PDF/bulletins/09-9.pdf: “Employees appointed to positions that are not covered by FERS or CSRS (e.g., a position covered by Social Security (FICA) only) are not eligible to participate in the TSP.” I encourage you to read the relevant parts of the bulletin for more details that may apply to you.
Tags: annuity, CSRS, rehire, Social Security, TSP
Use TSP for buyback?
February 4th, 2013 | Uncategorized
Q. I retired from the Transportation Security Administration on Aug. 1 under CSRS Offset. I was employed in the 1970s and 1980s and owe approximately $42,000 if I wish to buy back this time and get credit for it in my annuity. I was considering using my Thrift Savings Plan dollars for part of this buyback instead of taking the TSP as an annuity or lump sum. Is it possible to transfer the TSP balance to CSRS in some way so that I would not pay a withdrawal fee or taxes on it? (I am 66).
A. No.
Tags: annuity, CSRS, lump-sum, retirement, taxes, transfer, TSP, withdrawal
Retirement bonus and contributions to Roth IRA and TSP
January 28th, 2013 | Uncategorized
Q. I agreed to a $20,000 retirement incentive bonus offer from the Postal Service and retired in May 2011. The first half of the bonus was paid in November 2011 and the second half in November 2012.
Today, I received a W-2 from the Postal Service describing this second half of the bonus as wages received in 2012 even though I officially retired in May 2011 and haven’t worked for them since then. (I had been assuming the bonus payment in 2012 was going to be incorporated into my CSRS retirement accounting.)
I haven’t earned any other income since I retired, but since I have “USPS wages received in 2012,” am I eligible to contribute $6,000 to my Roth IRA for 2012? And, if I had acted on this in 2012, would I have been eligible to contribute perhaps my entire $10,000 to my Thrift Savings Plan account?
A. Income that is included on your W-2 as wages qualifies as the basis for an IRA contribution, but your tax preparer is ultimately responsible for what goes on your tax return. Regular TSP contributions can only be made by payroll deferral, so if the money wasn’t included in a paycheck, you could not have contributed any of it to the TSP.
Tags: contributions, CSRS, Postal Service, retirement, Roth IRA, TSP, W-2
TSP, Roth and G Fund
January 23rd, 2013 | Uncategorized
Q. I plan on retiring in August at age 60 with over 37 years of service. I am under CSRS. I also contribute to the Thrift Savings Plan and started a Roth in December. Given that the feds are planning to “borrow” from the G Fund, would I be wiser to convert all TSP monies to Roth or withdraw and put into another IRA?
A. I don’t think so. The law requires that the G Fund be made whole.
Tags: contributions, CSRS, G fund, retirement, Roth IRA, TSP, withdrawal
TSP allocation
January 23rd, 2013 | Uncategorized
Q. I would like to know a good allocation of my Thrift Savings Plan funds. I retired a year ago, and I am under CSRS. I have about $140,000 in the F Fund. I am 60 years old and do not need the money as of yet. I am looking for a fairly safe allocation within the funds for a 6 percent to 10 percent return.
A. A good allocation will produce the maximum possible expected return in exchange for the level of risk it produces, and there are many such allocations. You should note, however, that there many more allocations that are not “good,” so care is in order. Six percent to 10 percent is a huge range in investing terms, so there is no single answer to your question.
Tags: allocation, CSRS, F Fund, investment, return, TSP
TSP into IRA
January 21st, 2013 | Uncategorized
Q. I am a 64-year-old CSRS employee. If I transfer some of my Thrift Savings Plan into an IRA with a private company, does it need to go into a traditional IRA, or can it be transferred into a Roth IRA?
A. It can go into either, but check with a CPA before proceeding.
VCP into Roth IRA
January 21st, 2013 | Uncategorized
Q. I am in CSRS. Can I still invest after-tax money in the Voluntary Contributions Program and then convert it to a Roth IRA, or have things changed in 2013?
A. To the best of my knowledge, you can.
Tags: CSRS, Roth IRA, taxes, voluntary contributions program
Workers’ comp and in-service withdrawal
January 21st, 2013 | Uncategorized
Q. I have a friend who has been receiving workers’ compensation benefits for about 25 years but is not yet separated from service and worked under CSRS. Can he apply to the Office of Personnel Management to receive the monies in TSP in a lump-sum payment without having to retire? Or will he have to apply for disability retirement first?
A. As long as he is employed, the in-service withdrawal rules will apply.
Tags: CSRS, disability retirement, in-service withdrawal, lump-sum, OPM, OWCP
TSP maximum contribution or VCP?
January 14th, 2013 | Uncategorized
Q. I am retiring in June under CSRS at age 54 after 31 years of service (Air Traffic Provision). I have been working outside of the country for the past three years as a loaned executive and have had to pay my CSRS benefits out of pocket to keep my CSRS entitlement while outside of the country. During this period, I have not been able to contribute money into the Thrift Savings Plan since my salary is paid by the out of country organization where I am assigned. I will only return to the Federal Aviation Association for one month before I retire. Should I contribute as much as possible to the TSP in that month, or put money into the CSRS Voluntary Contributions Plan prior to my retirement to maximize savings before I retire?
A. Use Form TSP-1 to elect to defer all of your net, pre-tax pay into your TSP account. Contributing money to the VCP account before you retire, and then rolling over the after-tax balance to an IRA and any earnings to your TSP account is an attractive move if you have the after-tax cash handy and can wait the required holding period before withdrawing from the Roth IRA.
Tags: CSRS, retirement, Roth IRA, taxes, TSP, voluntary contributions program
TSP withdrawal
January 14th, 2013 | Uncategorized
Q. I am a CSRS employee planning on retiring at age 55. I also have been paying into the Thrift Savings Program. Will I be able to withdraw from TSP when I retire at age 55 without penalty?
A. Yes.
Tags: CSRS, IRA, penalty, retirement, TSP, withdrawal