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
Penalties for leaving money in TSP
May 6th, 2013 | Uncategorized
Q. If I leave my money in the Thrift Savings Plan, will I be penalized? Is it correct to say that I have the option of rolling it into an IRA or withdrawing all of it or part of it?
A. You may leave your money in the TSP until the IRS minimum distribution requirements begin. The TSP does not penalize you for leaving your money there.
Tags: IRA, penalty, Required Minimum Distribution, rollover, TSP
TSP withdrawal penalty
May 6th, 2013 | Uncategorized
Q. If I have left the federal government at age 57 and want to withdraw from my Thrift Savings Plan account, is there a penalty?
A. No.
Tags: age, penalty, TSP, withdrawal
Penalty on TSP withdrawal?
April 24th, 2013 | Uncategorized
Q. My age is 52. I worked 22 years in the Postal Service. I have a Thrift Savings Plan account and am now retired due to a disability. If I make a full withdrawal, will I be penalized?
A. Yes, unless you qualify for one of the exceptions listed on Page 7 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf.
Tags: age, Disability, penalty, Postal Service, retirement, TSP, withdrawal
Penalty for transfer from former employer’s 401(k) to TSP
April 24th, 2013 | Uncategorized
Q. Your April 1 Money Matters article identifies the exception to the 10 percent penalty for early distributions for separation from federal service during or after the calendar year one reaches age 55. My question relates to funds transferred to my Thrift Savings Plan account from a former employer’s 401(k) plan. Does the exception apply to all funds contained in my TSP account, or just those funds contributed to the TSP in the normal course of my federal service employment — i.e., not counting funds transferred from a prior 401(k) account?
A. It applies to the contents of your TSP account, including transfers from other plans or accounts.
TSP withdrawal penalty after MRA but before 59 1/2
April 9th, 2013 | Uncategorized
Q. I will have over 30 years of service when I reach my minimum retirement age of 57. If I retire and start withdrawing Thrift Savings Plan money, will I pay an extra tax for taking out payments before age 59½?
A. No.
Tags: Minimum Retirement Age, penalty, TSP, withdrawal
TSP withdrawal
April 9th, 2013 | Uncategorized
Q. Can I withdraw my total funds from the Thrift Savings Plan without penalty at age 62?
A. Yes.
Tags: age, penalty, TSP, withdrawal
Roth TSP rollover
April 2nd, 2013 | Uncategorized
Q. If I contribute $40,000 to my Roth TSP account, it grows to $60,000 and I subsequently leave government service and roll that Roth TSP into a Roth IRA, wouldn’t I be able to immediately withdraw up to $40,000 without tax or penalty, even though I’m less than 59½ and have not had either account for more than five years?
A. Yes, it is possible to withdraw your contributions at any time without tax or penalty.
Tags: penalty, rollover, Roth IRA, Roth TSP, taxes, withdrawal
Roth TSP withdrawal
March 26th, 2013 | Uncategorized
Q. I am 47 and hope to retire at my minimum retirement age in nine years. I contribute to both my traditional Thrift Savings Plan and Roth TSP. A publication I read, “Important Tax Information about Payments from Your TSP Account,” says you will not have to pay taxes for Roth contributions if you follow a two-step rule: Hold for five years + age 59½. But I think it also says that if I transfer my Roth TSP out of the TSP when I retire, the monies will not be subject to taxes. Is this correct?
Can I only roll over my Roth TSP and keep my traditional TSP with the TSP or must I roll over both the Roth and traditional? I ask because I would like to keep my traditional TSP where it is and only roll over the Roth to avoid taxes on distributions that occur before age 59½.
A. The five-year + 59½ rule applies only to earnings, but it applies to both your Roth TSP and a Roth IRA account. You may always withdraw your contributions from either account without tax or penalty. You may transfer all or part of your Roth TSP balance to a Roth IRA, if you are eligible for a partial withdrawal, and leave the remainder in your TSP account, using Form TSP-77.
Tags: contributions, Minimum Retirement Age, partial withdrawal, penalty, rollover, Roth IRA, Roth TSP, taxes, TSP, withdrawal
Workers’ comp and TSP withdrawal
March 19th, 2013 | Uncategorized
Q. I am below the age for Thrift Savings Plan withdrawal without penalty (soon to be 50), but it looks like I will be out on workers’ compensation under permanent disability shortly. Due to the impact on my income and an ongoing issue, I need to make a withdrawal or close my TSP to continue meeting my obligations. I have thoroughly researched the issue of using a TSP but have little choice. A loan is not an option (I’m paying one off and, if I’m on disability, I can’t take one out). And I’ve looked into other avenues, to include financial planners, with no success. Without focusing on the 10 percent penalty, how can I submit for my account funds? Although I am vested with more than 22 years, do the age criteria prohibit access to any funds that are not your own contributions? Due to the previous loan, is it impossible to access these funds to avoid a more onerous financial situation? I have an amount that would make us able to live on the disability funds. Is this a simple matter of age and letter of the law?
A. As soon as you are separated from federal service, you may request a distribution of some or all of your TSP funds. Before you separate, you may request a hardship withdrawal if you can qualify, or you could take a loan and then fail to pay it back, which will result in a distribution.
Tags: age, contributions, Disability, distribution, income, loan repayment, loans, penalty, separating, TSP, vested, withdrawal