How can I cut taxes on my IRA withdrawals ? How can I transfer money from a spouse’s federal thrift savings into an IRA?
Terry Says: Oops, you can’t “cut taxes” on IRA withdrawals; they are always considered ordinary income! Are you asking how you can stay in a lower income tax bracket once you are required to take minimum withdrawals (the year after you reach age 70-1/2)? You’d need to discuss that with a tax preparer or CPA. Perhaps you could increase tax deductions (mortgage interest, charitable contributions) — but those would also mean taking on the risk of a mortgage, or giving more money away. Remember the government wants its cut of the money you have been growing all these years!
As for “rolling over” your husband’s Federal thrift savings plan, that can be done only when he is separated from service — but there are many reasons to stay in the plan, and you should study carefully before making this move. Otherwise, you might end up with more costly IRA investments, or lose some of the guaranteed income plans available in the TSP. For more information on the rules, click here to read the Federal brochures on the topic.