By Mike Miles
Furlough and TSP hardship withdrawal
May 13th, 2013 | Uncategorized
Q. I am facing furlough soon. I already have one Thrift Savings Plan loan. Can I withdraw money from my TSP on a hardship withdrawal basis because of the furlough? I realize, if I did, I would have to pay taxes on it, etc.
A. The furlough alone does not qualify you for a hardship withdrawal. To qualify for a financial hardship withdrawal, you must have a financial need for at least one of the following reasons:
* Negative monthly cash flow.
* Medical expenses (including household improvements needed for medical care) that you have not paid and that are not covered by insurance.
* Personal casualty loss(es) that you have not paid and that are not covered by insurance.
* Legal expenses (that you have not yet paid) for separation from your spouse or divorce.
Read the booklet at https://www.tsp.gov/PDF/formspubs/tspbk12.pdf for more details.
Tags: furloughs, TSP, withdrawal
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
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
Divorce and TSP
April 29th, 2013 | Uncategorized
Q. I am about to divorce my husband, who works for the Federal Aviation Administration.
1. Can I keep his health insurance as an individual? Does this cost anything to him? How much will it cost me?
2. How can I be eligible for his life insurance after divorce?
3. Which is more beneficial: Getting a survivor benefit or getting a higher pension?
4. When can he start taking money from his Thrift Savings Plan?
A. You can’t withdraw money from his TSP account. Your divorce settlement will govern how the TSP is divided and distributed and you’ll likely wind up with your share in an IRA in your name. The usual rules for distributions will then apply.
Tags: divorce, health insurance, IRA, life insurance, survivor benefits, TSP, withdrawal
TSP withdrawal at 70 1/2, Part II
April 24th, 2013 | Uncategorized
Q. I am retired CSRS. I was born Nov. 15, 1942. Therefore, I’ll be 70½ on May 15.
1. When will I have to start taking payments from my Thrift Savings Plan account?
2. Can I wait until January to March 2014 before I get my first payment?
3. What is the minimum I will have to take?
4. I do not want a total lump-sum payment.
5. Do I have to take a monthly payment, or can I get my minimum payment once a year?
6. What form do I need to submit to get minimal payments each year?
7. Can you provide the form?
A. You are required to take your first withdrawal by April 1, 2014. This will be the required minimum distribution for 2013. You are then required to take the 2014 RMD by end of the day on Dec. 31, 2014. The RMD amount is calculated for each year and will likely be different each year. The amount is calculated using the method described in IRS Publication 590. The TSP will calculate the RMD amount for you and send you monthly payments to meet the requirement. Use Form TSP-70 to request the monthly payments based on your life expectancy. You may take one lump-sum distribution from your TSP account and may only take monthly payments after that.
Tags: 70 1/2, CSRS, IRS, life expectancy, lump-sum, Required Minimum Distribution, retirement, TSP, withdrawal
TSP withdrawal at 70 1/2
April 24th, 2013 | Uncategorized
Q. I have to withdraw my Thrift Savings Plan because of my age (70½).
I am indecisive as to:
1. Withdraw all to a saving account
2. Get a partial withdrawal for 120 months, or
3. Withdraw part of it and gradually withdraw the rest over a 10-year time span.
My considerations are:
1. No taxes, as I understand it, over a period greater than 10 years on a gradual withdrawal
2. Putting me into a higher tax bracket.
What advice or comments can you give me?
A. Unless you can come up with a good reason – that is, using actual estimates of costs, taxes, etc., rather than just qualitative statements – I don’t know why you would take any more than the required minimum distribution each year.
Tags: 70 1/2, partial, Required Minimum Distribution, taxes, 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
Social Security and tax deductions from annuity and TSP
April 22nd, 2013 | Uncategorized
Q. When I retire, I will be 59½ and will have 30 years of service at the Postal Service. I will not have any earned income from that point on. I understand federal and state taxes will be taken out of my FERS annuity and any money I take out of my Thrift Savings Plan. Will I also have Social Security deducted from these two sources? Also, will my special retirement supplement and — when I turn 62, my SSI benefit — also be subject to federal and state taxes?
A. Mike: Your TSP withdrawals are subject to income taxation, but no employment taxes, like Social Security, Medicare or unemployment insurance.
Reg: Your special retirement supplement will be treated as ordinary income. To find out to what extent your Social Security will be taxable, see IRS Publication 721.
Tags: age, annuity, deduction, FERS, IRS, Medicare, Postal Service, Social Security, taxes, TSP, withdrawal
RMD at 70 1/2 if still working?
April 9th, 2013 | Uncategorized
Q. I am a FERS employee who will turn 70 in September. I fully expect to be working at 70½. Will I be required to take the minimum withdrawal from my Thrift Savings Plan account if I’m still working?
A. As long as you are still working for the federal government, distributions from your TSP account will not be required.
Tags: 70 1/2, FERS, Required Minimum Distribution, TSP, withdrawal
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