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The problem with tsp is that no one is there to answer your questions on the care act ! Disservice to everyone withholding this information because the deadline is 31 dec and they still haven’t answered my question sent last week about withdraw tax free and penalty for early withdraw waived and age waived
Shower Thought…What if I take an in-service withdrawal of my Traditional TSP at or after 59.5 years old, but take the withdrawal while residing and working in a tax-free zone?
Example; I’m working from age 58-60 on Kwajalein, Marshall Islands, with no Fed tax on my earnings, and only a 5% Marshallese tax. Would I simply pay 5% to the Marshall Islands as I would with all of my regular income, or is the TSP withdrawal still subject to Fed Tax as if I were in CONUS, Germany, or Japan, etc.?
Is there any way to transfer funds held in traditional fund into a Roth IRA while still in service?
If you haven't seen it yet, here is the link to the newest information on the TSP and the CARES act. https://www.tsp.gov/whatsnew/Content/index.html?utm_campaign=&utm_medium=email&utm_source=govdelivery#CARESupdate
What I understand about the CARES act and retirement account distributions (up to $100,000 penalty free.) is that you have 3 years to pay the tax on the distributions. You CAN also pay the distribution back, partially or in full, within 3 years and those payments will not count towards annual contribution limits. (And , of course, you would only pay the tax on the amount not paid back.)
BTW I received the following from the TSP today: "The CARES Act allows us to offer temporary loan and withdrawal options to TSP participants affected by COVID-19. We are working as quickly as possible to add these options to our system so you can count on efficient processing of these requests. You can check this webpage for updates about these options and when they will be available to you. We will post the next update by May 15, 2020"
If you are retired or exited active duty you can transfer all TSP funds to a self directed IRA. It can be transferred from one account to another without any tax ramifications. I agree that we have gone full anti -American/anti-Constitutionalist with our response to the Kung Flu. Get America back to work NOW!
Thanks Josh good info
Josh, 1. TSP Is NOT covered by ERISA (see page 4: https://www.tsp.gov/PDF/formspubs/tspbk11.pdf ) and 2nd paragraph 1st page here: https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/about-us/erisa-advisory-council/2013-locating-missing-and-lost-participants-emswiler-08-28.pdf )
2. Be careful with Fedsmith. Sometimes good. Sometimes not. Makes SURE you vet any info that you're basing a big decision on. Especially one that has tax consequences or is irrevocable.
3. Maybe the original question was confused with the CARES provision of repaying up to $100k withdrawal over 3 years to get the taxes back that you paid on the distribution?
Good video! Keep up the good work!
Cares Act info. I didn’t know all RMD’s were waived for 2020
We have a cooy of Cares Act. Do Not sure how Cares Act distinguishes from 401Ks or IRAs.
Cares Act allows you to withdraw up to $100K from an IRA or 401K and it their pay the distribution back or tax over three years penalty free.
In our case since we have a Roth Conversion Plan, we started taking monthly distributions of about $3K and another one for $35K to purchase a rental house in Texas that our son and family rents from us at cost. We are going to have distributions of $70K+ this year. So about half to invest on a house for our son with the option to buy it from us and the other half in cash. We are weighing in if we should keep the IRA distributions coming since mu wife's real estate business slowed down somewhat. We have not seen people default on their rents yet. 100% of people in our business paid their rent in April. Let's see how May goes. We have about 20 rentals. 3 are ours. Hope all is well. Suggestion would be to consult a tax professional for the response. Can't be everything to everybody all the time.
Correct, ALWAYS double and triple check multiple resources. It's YOUR Money and YOUR responsibility folks. Blessings.