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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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Launce  
#1 Posted : Thursday, August 22, 2019 9:31:28 AM(UTC)
Launce

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I am a federal retiree, and I've been keeping an emergency fund outside my TSP.

But with the new, flexible withdrawal rules, I don't see any reason to do that any more.

So I plan to use my current outside fund for projects or just to live on temporarily, reducing my TSP withdrawals accordingly, then when that's used up I'll readjust the TSP withdrawals to cover my annual budget. And I'll to do a 1-month emergency TSP withdrawal for any large expenses I incur (e.g., extraordinary unbudgeted medical expenses).

I'll keep SOME funds outside the TSP just to cover the time needed to implement a 1-month withdrawal, but I no longer need to be concerned about only being able to increase withdrawals once a year, and only getting the increase in 12 installments.

I'd have to pay tax on any extraordinary emergency withdrawal. But paying tax later is better than paying tax now.

Comments?
roger.d  
#2 Posted : Thursday, August 22, 2019 6:21:24 PM(UTC)
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Originally Posted by: Launce Go to Quoted Post
I am a federal retiree, and I've been keeping an emergency fund outside my TSP.

But with the new, flexible withdrawal rules, I don't see any reason to do that any more.

So I plan to use my current outside fund for projects or just to live on temporarily, reducing my TSP withdrawals accordingly, then when that's used up I'll readjust the TSP withdrawals to cover my annual budget. And I'll to do a 1-month emergency TSP withdrawal for any large expenses I incur (e.g., extraordinary unbudgeted medical expenses).

I'll keep SOME funds outside the TSP just to cover the time needed to implement a 1-month withdrawal, but I no longer need to be concerned about only being able to increase withdrawals once a year, and only getting the increase in 12 installments.

I'd have to pay tax on any extraordinary emergency withdrawal. But paying tax later is better than paying tax now.

Comments?


Sounds reasonable.

Learn to discipline yourself, so someone else doesn't have to
teeeeej  
#3 Posted : Saturday, August 24, 2019 11:57:19 AM(UTC)
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You might have huge RMD's in the future? I would withdraw what makes sense now.
FrankJr  
#4 Posted : Tuesday, August 27, 2019 9:49:19 PM(UTC)
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Don't put all your eggs in one basket? What is the advantage of the noted scenario? At retirement the goal is low risk, TSP or otherwise. The monies noted could be $1,000, $10,000, $100,000, etc. 1 month isn't a short period of time in the event of an "emergency".
Launce  
#5 Posted : Wednesday, August 28, 2019 5:45:28 AM(UTC)
Launce

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The main advantage is tax deferral. But a few years' worth of deferral, depending on the chance of an emergency (and my life expectancy), may not be that significant, I guess. All my eggs are in the US government basket, one way or another -- pension, SS, TSP, bonds; if the US defaults, I'm screwed no matter what (and in that scenario, I'm not sure my outside money-market fund is safe).
King_Fed  
#6 Posted : Friday, September 6, 2019 5:56:28 PM(UTC)
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Originally Posted by: Launce Go to Quoted Post
I am a federal retiree, and I've been keeping an emergency fund outside my TSP.

But with the new, flexible withdrawal rules, I don't see any reason to do that any more.

So I plan to use my current outside fund for projects or just to live on temporarily, reducing my TSP withdrawals accordingly, then when that's used up I'll readjust the TSP withdrawals to cover my annual budget. And I'll to do a 1-month emergency TSP withdrawal for any large expenses I incur (e.g., extraordinary unbudgeted medical expenses).

I'll keep SOME funds outside the TSP just to cover the time needed to implement a 1-month withdrawal, but I no longer need to be concerned about only being able to increase withdrawals once a year, and only getting the increase in 12 installments.

I'd have to pay tax on any extraordinary emergency withdrawal. But paying tax later is better than paying tax now.

Comments?


Nobody can say if this is a good idea or a bad idea. Only you have all the information.

I could do exactly what you are describing and I'd more than likely be fine.

My only issue is calling it an "emergency fund". By definition it is not an emergency fund.

It sounds like you have a small "emergency fund" that is part of your larger "emergency plan".

If it works for you, go for it. I don't have an issue with your emergency plan or you keeping a small emergency fund.

Having been through a real emergency once in my life, I'd not do it. But in reality even my large emergency fund is more of a "piece of mind" than anything else. lol

Edited by user Friday, September 6, 2019 5:57:44 PM(UTC)  | Reason: Not specified

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