By Mike Miles
Re-employment and TSP payments
May 9th, 2013 | Uncategorized
Q. If I start taking my retirement now at 62 — FERS, Thrift Savings Plan payments and Social Security — and end up being picked back up at some point in federal service: I understand my FERS benefits would be cut by the amount I make in a new job. What about TSP payments? Are they exempt from penalties of re-employment?
A. If you are rehired, your automatic monthly payments will stop and you will be subject to the in-service withdrawal rules.
Tags: age, FERS, in-service withdrawal, monthly, penalty, rehire, Social Security, TSP
Taxes and transferring TSP to Roth IRA
May 9th, 2013 | Uncategorized
Q. Upon retirement, I’m considering transferring a portion of my Thrift Savings Plan balance in monthly payments directly into a Roth IRA. Since my TSP is pretax, I understand that taxes will need to be paid on these funds upon conversion to a Roth. I am in a state with no income tax on federal pensions and distributions from the TSP (North Carolina) and want to be sure that this transfer from my TSP to the Roth will be considered a TSP distribution for tax purposes, and therefore, subject to federal and not North Carolina taxes. Does the Office of Personnel Management issue a 1099R for such a transaction to generate the tax liability?
A. Yes.
TSP withdrawal
May 6th, 2013 | Uncategorized
Q. I will retire within the next eight years. When I get ready to withdraw my Thrift Savings Plan, can I do it at various intervals or annually? I hear you may have to take it all out at one time.
A. You may withdraw your money as a lump sum or through monthly withdrawals. Visit www.tsp.gov to learn more about your options.
Tags: lump-sum, monthly, TSP, withdrawal
Partial TSP withdrawal
April 29th, 2013 | Uncategorized
Q. I will be 63 years old in August. I have made a previous partial Thrift Savings Plan withdrawal but need another for a down payment on a home.
1. Can I make another partial withdrawal? If not, what regulation dictates that I cannot?
2. If I can’t make another partial withdrawal and decide to take monthly payments, can I set the monthly payment amount or does TSP have a required monthly distribution rule? And will the remaining balances continue to earn income?
A. You are limited to one partial withdrawal during your lifetime. I’m not a lawyer, so you’ll have to look up the regulation yourself. You may request automatic monthly withdrawals in any amount you like and change the amount once each year in January. Your remaining balance continues to be invested according to your direction.
Tags: distribution, monthly, partial withdrawal, TSP
One-time TSP withdrawal
April 2nd, 2013 | Uncategorized
Q. I am 60 years old and, for seven years, have been separated from 21 years of federal service. I have never made any withdrawals from my Thrift Savings Plan account. I am interested in making a partial withdrawal for home improvement projects. I understand a one-time partial withdrawal leaving the rest in TSP for later is allowed, but does one-time mean that if I make a one-time partial withdrawal now, I will not be allowed to make a full withdrawal of the remaining money later when I am fully retired to perhaps pay off the mortgage? Will I only be allowed monthly payments?
A. You are allowed one partial withdrawal and one full withdrawal, which may be taken as a lump sum of your entire remaining balance or as a series of monthly payments, which may then terminate in a withdrawal of the remainder.
Tags: lump-sum, monthly, one-time partial, TSP, withdrawal
TSP withdrawal
March 21st, 2013 | Uncategorized
Q. When retiring, can I take a large sum of my Thrift Savings Plan out before starting my monthly allotment with the remaining amount?
A. Yes, as long as you haven’t taken an age-based, in-service withdrawal before you retire.
Tags: age, in-service withdrawal, monthly, retirement, TSP
Automatic monthly distributions
March 19th, 2013 | Uncategorized
Q. How often am I able to change my allotment amount being drawn from my Thrift Savings Plan account yearly monthly, etc., while retired? Can I still move my money between funds after I start receiving the allotment?
A. If you’re referring to automatic monthly distributions, the amount can be changed once each year, effective in January. You may, and are responsible to, continue to manage your account for as long as it continues.
Tags: distribution, monthly, retirement, TSP
TSP withdrawal
March 19th, 2013 | Uncategorized
Q. Can I take $20,000 out and get a monthly annuity from the rest of the money?
A. Yes.
Tags: annuity, monthly, TSP, withdrawal
Increasing monthly TSP contributions
March 11th, 2013 | Uncategorized
Q. I am a GS-04, Step 10. My account balance as of Dec. 31 would provide me with a lifetime Thrift Savings Plan monthly amount of $451. As of this time, I contribute $300 every pay period to TSP. Let’s say my goal is to have a lifetime TSP monthly amount of $1,000. By how much would I have to increase my TSP amount each pay period? I am 52 years old. I am under FERS. If I was offered an early retirement, should I take it? Or should take the chance of getting furloughed for an uncertain amount of time?
A. Unfortunately, it is impossible to answer your question, since the answer will depend upon a number of factors including the rate of return on your TSP investment between now and the time of you buy your annuity, the sequence of the returns and how they align with your savings contributions, the way you manage your TSP account and the annuity payout rate in effect at the time of purchase. You should consider seeking the help of a trustworthy and cost effective investment adviser.
Tags: age, annuity, contributions, early retirement, FERS, furloughs, investment, monthly, TSP
TSP loan and taxes
February 20th, 2013 | Uncategorized
Q. I am an air traffic controller who is retiring in two months at age 48. I have an outstanding Thrift Savings Plan loan for about $9,000. What happens if I don’t pay this off before I retire? Do I pay the 10 percent penalty, along with it being shown as income? Does this affect my monthly withdrawal from TSP using the 72(t) rule? Also, can I take a one-time partial lump-sum withdrawal and pay the 10 percent penalty without it affecting my monthly withdrawal?
A. If you don’t repay the loan within the grace period after you retire, it will be declared a taxable distribution and you will owe penalty and taxes on the income. This does not affect your ability to initiate monthly distribution payments to satisfy the 72(t) rules on the remaining balance. Taking a partial withdrawal does not impair your ability to take automatic monthly distributions, which are considered a form of full withdrawal.
Tags: 72(t), loan repayment, lump-sum, monthly, one-time partial, penalty, retirement, taxable distribution, taxes, TSP, withdrawal