By Mike Miles
Using TSP money for military buyback
April 22nd, 2013 | Uncategorized
Q. I am making payments to buy back my military deposit, and I will also be making a redeposit of FERS funds. Can I transfer funds from the Thrift Savings Plan to military buyback and FERS? After all, these are both accounts for retirement and not money I’d be using now.
A. This is not allowed since your TSP money is pretax and your deposits must be made with post-tax money.
Tags: FERS, military buyback, taxes, transfer, TSP
Military buyback with TSP funds?
April 9th, 2013 | Uncategorized
Q. What types of funds can be used to buy back military service time (nonqualified, qualified, Thrift Savings Plan account funds, IRA funds)?
A. Only after-tax money can be used, so you can’t use TSP, IRA or 401(k) money for this unless you withdraw it and pay the tax bill first.
Tags: 401(k), IRA, military buyback, taxes, TSP, withdrawal
Military buyback and TSP fund transfer
April 3rd, 2013 | Uncategorized
Q. I am making payments to buy back my military deposit and I will also be making a redeposit of FERS funds. Can I transfer funds from the Thrift Savings Plan to military buyback and FERS? After all, these are both accounts for retirement and not money I’d be using now.
A. No.
Tags: FERS, military buyback, retirement, transfer, TSP
Buyback and TSP investment strategy
April 2nd, 2013 | Uncategorized
Q. I am 57 years old. I have about a year and three months with the Defense Department (FERS). I am in the process of buying back 14.8 years of service, and I plan to retire in about 12 years. Will the buyback help with the Thrift Savings Plan? What is a good TSP investment option for someone in my situation?
A. I’m not sure how the buyback will help your TSP account, since you will not be entitled to any additional contributions as a result. The investment strategy that you choose should be based on more information that you’ve provided here. If you’re not sure what to do, I suggest that you use the L Fund that most closely corresponds to your life expectancy — or joint life expectancy, if you are married. The problem is that it’s impossible to know exactly how much you can safely withdraw — and when — without more analysis, planning and management along the way.
Tags: contributions, FERS, investment, L Fund, life expectancy, military buyback, TSP
Claiming retroactive TSP contributions
March 21st, 2013 | Uncategorized
Q. I’m a 58-year-old FERS employee with 29 years of service. I have two years of leave without pay from while I was mobilized in the Army Reserve (2004-06). I am in the process of paying my military deposit to buy back this time.
After returning to federal service, I did not identify that I wanted to catch up on the Thrift Savings Plan and get my TSP matching contributions.
I recently read on the TSP website that I could still use the substantial contributions I made to the uniformed services TSP to request my civilian matching contributions. I have my military leave and earnings statements to confirm my contributions; and the TSP website confirms I never received the automatic 1 percent or the 4 percent matching funds.
Can I still submit for the retroactive TSP contributions? If so, should I do it through the agency I was with while on duty, or through my current agency I subsequently transferred to later on?
A. See this notice https://www.tsp.gov/PDF/formspubs/oc95-5.pdf and go to your agency human resources office to pursue the missed agency contributions.
Tags: contributions, FERS, matching funds, military buyback, TSP
FERS firefighter retirement
January 14th, 2013 | Uncategorized
Q. I am a federal firefighter and a FERS employee. In 2022, I will have 21 years of creditable service and four years of bought-back active military time and be 48 years old.
1. Will I be able to retire under the provisions of 25 years of service at any age?
2. Will I receive the special category retirement percentages (1.7 x high-3 x creditable service, etc.)?
3. Will I receive the special retirement supplement until 62?
4. Will I not be able to withdraw any Thrift Savings Plan annuities until 62?
A. Reg: 1. No, you won’t be able to retire. Only actual service as a firefighter — not active duty for which you’ve made a deposit — counts toward the 25-year requirement.
2. When you are eligible for retirement and do so, your annuity would be computed using the special category percentage for the first 20 years; the remaining time would be computed using the standard multiplier.
3. When you retire, you would receive the special retirement supplement, regardless of your age, until you reach age 62.
Mike: 4. You will have access to your TSP assets, for withdrawal or to purchase an annuity, as soon as you retire.
Tags: age, annuity, FERS, firefighter, military buyback, retirement, Special Retirement Supplement, TSP, withdrawal
C Fund to G?
December 31st, 2012 | Uncategorized
Q. I’m a 52-year-old federal employee serving in military status. I have the following in my Thrift Savings Plan account: C Fund — $145,000; G Fund — $30,000; F Fund — $10,000; and I Fund — $7,000 for a total of $192,000. I have other IRA investments of $70,000. I plan to buy back about eight years of military service for my federal retirement. My risk level is somewhat moderate, and I wanted to know if I should move a percentage of my C Fund into G? The fiscal cliff concerns me. I’m not sure if I’m balanced in my approach. I do not expect to retire as a civilian until 65. Thoughts?
A. I can’t tell you what to do since I don’t know nearly enough about your circumstances except your current TSP allocation of 75 percent C Fund, 16 percent G Fund, 5 percent F Fund and 4 percent I Fund — basically 80 percent stocks, 5 percent bonds and 15 percent cash — would be considered aggressive by most objective standards, not really moderate.
Tags: C Fund, F Fund, fund transfers, G fund, I Fund, IRA, military buyback, retirement, TSP
Buyback, Social Security, high-3 and TSP
November 28th, 2012 | Uncategorized
Q. I have 33 years in and am under CSRS. I will be 60 years old in May. I served less than two years in the Army in my 20s. I am a WG-8 making almost $25 an hour. I receive correspondence statements from Social Security that if I retire at age 62, I would be eligible for approximately $300 based on a second job 12 years ago and jobs before joining the government in the 1980s.
1. Should I buy back the time I have in the Army?
2. Will the buyback help increase my Social Security? Or will the money from Social Security lower my pension?
3. Should I get a part-time job to increase my Social Security benefit? I know I am not eligible for disability based on not having 40 quarters, but will the small amount of time I have paid into Social Security help or hurt me when I want to retire at 62?
4. Is there anything current on whether the top three years will be changed to top five? And, if it gets changed, should I retire before it is implemented?
5. Are there any ways to increase my pension other than saving with the Thrift Savings Plan or getting a second job (see above question)? I have reservations with TSP because of the taxes. I have money in it but am not saving. My understanding is I can’t touch it without penalty until age 62. Is this correct?
A. Mike: You’ll have access to your TSP money, without any early withdrawal penalty, as soon as you retire from federal service.
Reg: Because you were first employed before Oct. 1, 1982, you’ll get credit for your active-duty service in determining your eligibility to retire and in your annuity computation. If you aren’t eligible for a Social Security benefit at age 62, your annuity won’t be affected. The Office of Personnel Management only checks once, at age 62, if you are already retired, or when you retire if it’s at age 62 or later.
If you take a job after retirement and earn enough credits to be eligible for a Social Security benefit, it will be affected by the windfall elimination provision. The WEP reduces the Social Security benefit of anyone who receives an annuity from a retirement system where he didn’t pay Social Security taxes, such as CSRS, and has fewer than 30 years of substantial earnings under Social Security.
Tags: annuity calculation, CSRS, Disability, early withdrawal penalty, military buyback, OPM, retirement, Social Security, taxes, TSP, windfall elimination provision
Military buyback and 401(k) rollover
November 19th, 2012 | Uncategorized
Q. My husband has 10 years of Air Force service and is in the process of negotiating to take a federal position. Is it possible to use a 401(k) rollover to buy back his service? I am thinking not, since a rollover is only allowable to an IRA or other “qualified plan.” We certainly can take a direct taxable distribution of a portion of that 401(k) plan and use that money to buy back, but he wondered if it can be done with the rollover.
A. No.
Tags: 401(k), IRA, military buyback, rollover, taxable distribution
When to start receiving TSP
November 14th, 2012 | Uncategorized
Q. I am 47 years old and worked for the post office for three years. During that time, I bought back my military service time of eight years. Am I eligible to someday get that retirement for the 11 years? If not, will I be reimbursed what it cost to buy back my time? Is the Thrift Savings Plan a separate entity, and when can I start receiving that? I’m currently working away from the federal realm.
A. Mike: The TSP is yours to maintain and manage for as long as you like. You may withdraw money from it whenever you are ready, but there are limits to how frequently you can withdraw your money. You are always free to withdraw all of your money in a lump sum, whenever you like. Your withdrawals will be taxed as ordinary income and may be subject to the Internal Revenue Service early withdrawal penalty until you reach age 59½.
Reg: No, you wouldn’t be eligible for an annuity because you didn’t have at least five years of actual civilian service. If you are planning to return to government service, you could pick up where you left off. Then the earliest you could retire would be when you reach your minimum retirement age. In your case, that would be 56 and two months. If you don’t plan on returning, you can ask for a refund of your retirement contributions, including the deposit you made to get credit for your active-duty service.
To do that, go to www.opm.gov, click on Find Form(s), and download a copy of Standard Form 3106, Application for Refund of Retirement Deductions.
Tags: early withdrawal penalty, IRS, lump-sum, military buyback, OPM, Postal Service, retirement, taxes, TSP