Q. I am a CSRS employee, hired in 1979 and contemplating retirement April 3.
I will be subject to the windfall elimination provision since I earned 40 credits of Social Security eligibility before federal employment. But my spouse is also Social Security eligible and started receiving Social Security benefits of more than $1,900/month (gross) last month, whereas the SSA has estimated that my Social Security benefits would be approximately $385/month (gross). Would I be eligible for spousal Social Security benefits?
Also, a financial planner has recommended that I roll over my substantial TSP account balance before I turn 70½ (October 2017), but I do not consider this wise because the administrative costs of the TSP are so low compared to other options (and I’m doing fine in the TSP). Do you see any advantages to an early rollover from the TSP?
Finally, this planner advised that I must take all of my TSP account balance out by the time I am 70½ as either a taxable distribution, a rollover or a combination of those.
Can I not maintain my TSP account after age 70½ and simply start taking periodic distributions?
A. Because you will be receiving an annuity from CSRS, a retirement system where you didn’t pay Social Security taxes, you’ll be subject to both the windfall elimination provision and the government pension offset. The WEP will reduce your Social Security benefit because you don’t have at least 30 years of substantial earnings covered by Social Security contributions. The GPO will reduce any Social Security spousal benefit you are entitled to by $2 for every $3 you receive in your CSRS annuity. In most cases, the GPO wipes out that benefit.