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TSP

Administered by the Federal Retirement Thrift Investment Board, this defined contribution plan for federal employees has roughly 4,614,874 participants, and over $358 billion in assets under management. Ask your TSP questions and post related topics here.

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wyre  
#1 Posted : Wednesday, June 22, 2022 8:08:06 AM(UTC)
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I’ve never taken a distribution from TSP, so I’m a bit unclear about one thing. With the market down significantly, I’m holding off on taking my first RMD til later in the year. When you withdraw money, does TSP ( traditional) take a proportional amount based on your cash vs stock holdings, or can you simply withdraw cash? If the former, I suppose you can rebalance afterwards, but given the precipitous drop, leaving the stock account as is would be preferable. I believe you can choose between traditional and Roth ( which I don’t have in TSP) but I haven’t seen anything about specifying source of traditional withdrawals, so I’m guessing they are proportional, regardless of whether they’re one-time or scheduled deductions.

Also, are they automatically withholding 10% from one-time TSP withdrawals? I believe they use 20% for the automated scheduled payments, but I vaguely recollect the figure is lower for manually-requested withdrawals. Can someone confirm?
Trying to avoid calling TSP at this busy time, and I need to adjust pension withholding. thanks!
GWPDA  
#2 Posted : Thursday, June 23, 2022 5:23:48 AM(UTC)
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When you withdraw from the TSP, you will be withdrawing cash. TSP withdrawals withhold 20% off the top, altho you may increase that amount if you like. Additional information is found at https://www.tsp.gov/bulletins/19-6/

wyre  
#3 Posted : Thursday, June 23, 2022 5:37:15 AM(UTC)
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Thanks. I was confused because in the Tsp “tax rules for tsp payments” brochure that I just found online it says non-periodic payment withholding is 10%. I suppose I could request a small initial withdrawal of a thousand and see what they send. This RMD is kind of bumming me out. Might be best to leave it ( or change it to 20% … even tho I’ve already tweaked pension withholding to cover +10% of the RMD). I can always buy extra ibonds with any tax refund.

Brochure says:

Tax Withholding from RMDs
With one exception explained in the next paragraph, RMDs are in the IRS category of non-periodic installments. We must withhold 10% for federal income tax unless we receive other instructions from you. You can instruct us to waive withholding or to withhold more than 10% by contacting us using one of the ThriftLine options listed on page 21.

Exception: There is one situation in which we would not treat your RMD as a non-periodic payment: If
a portion of an installment is used to satisfy your RMD and that installment is categorized as a periodic payment (payments expected to last 10 years or more or based on life expectancy), then the whole payment, including the RMD portion, is considered a periodic payment. For periodic payments, we must withhold for federal tax as if you are married with three dependents. As with non-periodic payments, you may instruct us to withhold an additional amount from your periodic payment or to waive withholding. With periodic payments, you can also choose to have federal income tax withheld based on allowances and marital status.
roger.d  
#4 Posted : Friday, June 24, 2022 2:12:56 PM(UTC)
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Originally Posted by: wyre Go to Quoted Post
I’ve never taken a distribution from TSP, so I’m a bit unclear about one thing. With the market down significantly, I’m holding off on taking my first RMD til later in the year. When you withdraw money, does TSP ( traditional) take a proportional amount based on your cash vs stock holdings, or can you simply withdraw cash? If the former, I suppose you can rebalance afterwards, but given the precipitous drop, leaving the stock account as is would be preferable. I believe you can choose between traditional and Roth ( which I don’t have in TSP) but I haven’t seen anything about specifying source of traditional withdrawals, so I’m guessing they are proportional, regardless of whether they’re one-time or scheduled deductions.

Also, are they automatically withholding 10% from one-time TSP withdrawals? I believe they use 20% for the automated scheduled payments, but I vaguely recollect the figure is lower for manually-requested withdrawals. Can someone confirm?
Trying to avoid calling TSP at this busy time, and I need to adjust pension withholding. thanks!


Originally Posted by: GWPDA Go to Quoted Post
When you withdraw from the TSP, you will be withdrawing cash. TSP withdrawals withhold 20% off the top, altho you may increase that amount if you like. Additional information is found at https://www.tsp.gov/bulletins/19-6/




Yes, you receive cash in your bank account.

The funds are taken proportionally from your holdings. If you had a 30%G, 30%F, 40%C allocation and you wanted $10000.00, $3k would come from the G and F funds, and $4k would come from the C fund.

Socialist governments traditionally do make a financial mess. They always run out of other people’s money. --Margaret Thatcher
wyre  
#5 Posted : Friday, June 24, 2022 5:32:15 PM(UTC)
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Thanks! That’s what I thought. Appreciate the confirmation.
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