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Retirement Planning


Whether you are close to federal employee retirement or just starting out in your career, this is the place to share ideas with your federal colleagues on creating a secure financial foundation.


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capitol square  
#1 Posted : Wednesday, June 06, 2012 4:47:22 AM(UTC)
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I am considering a partial withdrawal of my TSP and transferring the partial withdrawal into a traditional IRA.  Is there a time limit to make the partial withdrawal after my retirement, or may I complete the partial withdrawal anytime between my retirement date and April 1 of the year after I tune 70 1/2?
oktoots  
#2 Posted : Wednesday, June 06, 2012 7:13:16 AM(UTC)
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There is no time limit. You can do the partial withdrawal, or any combination of withdrawals, at any time up to age 70 1/2.
multiple identities to 0%
Fed1969  
#3 Posted : Wednesday, June 06, 2012 9:54:46 AM(UTC)
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TSP has very restrictive withdrawal options.  If you want to spread the withdrawal around, it may be easier to transfer it to one location such as Vanguard and than transfers out from there.
hearth  
#4 Posted : Thursday, June 07, 2012 12:22:16 AM(UTC)
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I will be taking monthly payments from my TSP, but I also intend to take a partial withdrawal to keep on hand for emergencies.  I can start monthly payments when I retire and then take the one-time emergency withdrawal at any time before I'm 70 1/2, correct?  (I'm eligible to retire at any time.)

Fed1969  
#5 Posted : Thursday, June 07, 2012 1:03:14 AM(UTC)
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hearth wrote:
I will be taking monthly payments from my TSP, but I also intend to take a partial withdrawal to keep on hand for emergencies.  I can start monthly payments when I retire and then take the one-time emergency withdrawal at any time before I'm 70 1/2, correct?  (I'm eligible to retire at any time.)

 This seems like an excellent plan.
drb3  
#6 Posted : Thursday, June 07, 2012 3:19:35 AM(UTC)
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If I'm not mistaken, you should take the partial FIRST, because the monthly payment is essentially FULL withdrawal, paid monthly. I took a partial; waited 2 weeks til I saw it went through, then sent in the request for monthly payments

SuzFed  
#7 Posted : Thursday, June 07, 2012 4:01:39 AM(UTC)
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Folks,

I have read in numerous sources, and had this confirmed at a retirement seminar last month, that you can NOT begin taking monthly payments from the TSP and *thereafter* take a partial lump sum withdrawal. You have to take the partial withdrawal first. There is no time limit on this - you could leave your TSP alone for years with no withdrawals - but if you start the monthly withdrawals and then need a lump sum out of it, you'll have to withdraw all your funds out of the TSP. Do the partial lump sum withdrawal up front or forever hold your peace.

I would suggest leaving the TSP alone as long as possible, and then, once you need cash, doing a rollover of a lump sum to an IRA, followed by monthly withdrawals from the TSP. This gives you regular income and the option to get more cash out of the IRA when needed. Note that this won't help those who need a big lump sum out of their TSP before age 59 1/2, because you can't take money out of an IRA before then. But with relatively large monthly withdrawals to start, you could still build up a non-IRA emergency fund pretty quickly.

Note that you can change the monthly withdrawal amount once a year. And you can have monthly withdrawals rolled over into an IRA if you wish. So there are lots of options out there if you want to keep $ in the TSP, but you want to plan ahead for maximum flexibility.

BTW, the retirement speaker I heard last month suggested that those who plan to contribute to the Roth TSP might want to use their one-time partial withdrawal to roll those funds into a Roth IRA at retirement. Otherwise, right now, the TSP plans to force people to take TSP withdrawals in retirement proportionately out of both their Roth and non-Roth TSP accounts, which is stupid for tax planning purposes.
hearth  
#8 Posted : Thursday, June 07, 2012 9:25:02 PM(UTC)
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Thanks to everyone for their replies and valuable input!  That's why I really appreciate this forum - I had read everything I could find on TSP, yet this was not clear to me.  Because I am a TransFERS employee, TSP is a huge part of my retirement.  I'm thankful that I dumped everything that I could into it  for all the years that I've been contributing.  Now it's time to enjoy it!

Tryno  
#9 Posted : Sunday, June 10, 2012 10:14:00 AM(UTC)
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Was thanked: 1 time(s) in 1 post(s)

"I had read everything I could find on TSP, yet this was not clear to me."
Don't worry, I'm not so sure the TSP managers understand all of it either
Not retiring yet  
#10 Posted : Monday, June 11, 2012 7:06:46 AM(UTC)
Not retiring yet

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Account Withdrawal Deadline

If you decide to leave your money in the TSP, be aware that you will be required to start withdrawing your money by April 1 of the year following either:

  • https://www.tsp.gov/reso...s/bullet_gray_large.gif; -: 0px 0.5em; -repeat: no-repeat no-repeat; ">The year you turn age 70½, if you are separated from Federal employment or the uniformed services, or
  • https://www.tsp.gov/reso...s/bullet_gray_large.gif; -: 0px 0.5em; -repeat: no-repeat no-repeat; ">The year you separate from Federal service, if you have already reached age 70½.

As a helpful reminder, the TSP will notify you before your required withdrawal date and mail you important tax information about your TSP withdrawal, as well as information about the IRS required minimum distributions.

https://www.tsp.gov/reso...onInfoBlueMini.gif; color: rgb34, 34, 34; font-family: Arial, Tahoma, helvetica, 'Myriad Web Pro'; line-height: 17px; -: 0% 0%; -repeat: no-repeat no-repeat; ">
If you do not begin withdrawing your account by the required deadline, your account balance will be forfeited to the TSP. You can reclaim it; however, you will not receive earnings on it from the time it was forfeited.

To understand your withdrawal options, visit Withdrawing Your TSP Account.



parastoo  
#11 Posted : Monday, August 13, 2012 6:29:18 AM(UTC)
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Hi,
   Has anyone tried to do a partial withdrawal after beginning monthly payments? And can someone cite the appropriate satute or regulation applying to this question? Also what about doing a partial annuitization of ones TSP after starting monthly payments?From my reading of the withdrawal booklet, annuitization is not considered a partial withdrawal it's considered part of the full withdrawal option. This is important to me because I would like to annuitize part of my TSP when I'm older [early 60's now] and when, I hope,  annuity rates are higher .
         Thanks,
                    P.
drb3  
#12 Posted : Monday, August 13, 2012 10:41:55 PM(UTC)
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starting monthly payments is considered "full withdrawal"; that is, all of the money in one's TSP is earmarked for monthly payment. AFAIK, the only option after designating monthly payments is complete withdrawal from TSP

rockyfield  
#13 Posted : Monday, August 13, 2012 11:22:03 PM(UTC)
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drb3 wrote:
starting monthly payments is considered "full withdrawal"; that is, all of the money in one's TSP is earmarked for monthly payment. AFAIK, the only option after designating monthly payments is complete withdrawal from TSP

 
If this is the case, once you start monthly payments, are you allowed to change the amount of the monthly payments every year?  For example, if you start payments at $1,000/month in year 1 when you are 60, are you able to change the payments to $2,000/month in year 2, then to $1,500/month in year 3, and so on as you need, until it runs out in say 15 years after you start payments and that is considered a complete withdrawal at age 75?
hearth  
#14 Posted : Monday, August 13, 2012 11:43:34 PM(UTC)
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Yes - you  may change your monthly withdrawl amount, starting each January.  Monthly withdrawals are considered full withdrawal, and they do not need to be completed by any particular age.

tigerseye  
#15 Posted : Tuesday, August 14, 2012 12:13:09 AM(UTC)
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Information on withdrawals from your TSP account is covered in this revised document: https://www.tsp.gov/PDF/formspubs/tspbk02.pdf issued in May. Withdrawals that come to you monthly can be done on an automatic basis (which uses a calculation from life expectancy tables and total value of your account), or based on your own decision of how much you may need to draw down on a monthly basis. However, once you've initially started withdrawing from the account at any time in the year, you can make a change to that monthly amount only during an open season starting in November and running through Dec. 15 using the TSP-73 form. At any time you are making the monthly withdrawals, you can submit a W-4P to change how much is withheld for federal income tax (either number of allowances or your own calculated value). Just keep in mind that TSP does not withhold for state taxes, so you may have to estimate what you owe and make quarterly payments to avoid a penalty.
 

tigerseye2012-08-14 08:21:36
annie  
#16 Posted : Tuesday, August 14, 2012 12:14:11 PM(UTC)
annie

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Hi.  I retired April 1 at age 58 and want to start withdrawals from my TSP. Some years I may only take the minimum of $25 per month and other years I may need up to $1000 per month. I know at age 70 or 70.5 the rules change but am I OK from a TSP rules perspective from age 58 to 70 to vary the yearly amounts from $25 month to over $1000 month?

I found out today I am finalized as of Sept 1.  Five months at OPM.

Thanks for your advice and this forum is great!

Annie




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