By Mike Miles
September 16th, 2013 | Uncategorized
Q. I’m nearing retirement and have a Thrift Savings Plan loan. If I decide not to pay off the loan but to pay the taxes on the taxable distribution, am I still eligible for the one-time partial withdrawal after I retire?
A. A declared taxable distribution does not violate the TSP’s eligibility requirements for taking a partial withdrawal after separating from service.
November 19th, 2012 | Uncategorized
Q. I am a firefighter with a county fire department in Florida. As such, I am part of the Florida Retirement System in the special risk class. I started my career early and will be eligible for retirement with full benefits and no FRS penalties by age 48. (This is 25 years of service.) However, because of the Internal Revenue Service penalty for retiring before age 50, I would receive a 10 percent tax penalty in addition to the normal taxes I will pay on my retirement income. I understand that I will receive the penalty of 10 percent. However, I want to know whether that penalty goes away after I have reached age 50, or if it continues until I am 59?
A. The early withdrawal penalty rules will continue to apply until you reach age 59½. You can avoid the penalty by withdrawing from your Thrift Savings Plan account in a series of Substantially Equal Periodic Payments under section 72(t) of the tax code.
September 18th, 2012 | Uncategorized
Q. My wife has 12 years of FERS service at the age of 62. She is eligible to retire. Can she withdraw the full amount from her Thrift Savings Plan without penalty?
May 23rd, 2012 | Uncategorized
Q. My spouse (a federal employee) and I contribute the maximum allowed to the Thrift Savings Plan each year, regular and catch-up. Can we still contribute to a Roth TSP over and above the limit?
A. Your Individual Retirement Account contributions do not affect the limits for TSP contributions. Your TSP eligibility, along with your income and other factors, may affect your IRA contribution limits, however.
October 14th, 2009 | Uncategorized
Q: I have an IRA from a previous employer that is not performing too well. The Thrift Savings Plan seems to be rebounding rather nicely over the past several months. Should I move the IRA into the TSP? Can this be done without any penalties?
A: The TSP is a better investment environment than any retail IRA account I have ever seen, and I generally recommend that eligible investors move their IRA money into the TSP whenever possible. You are eligible if your IRA account contains no after-tax money — money from non-deductible contributions. Check with your IRA custodian to determine what, if anything, they will charge for liquidating your account.
— Mike Miles