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Federal Employees Benefits Q &A

Do you have questions about your federal employee CSRS or FERS pension/annuity or federal employee retirement planning? Concerns about your Thrift Savings Plan (TSP) account or what about federal employee pay and leave issues?

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The Q&A forum is moderated by Ed Zurndorfer -- an expert on federal employee benefits -- and a Certified Financial Planner, chartered life underwriter and chartered financial consultant in Maryland.

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dtuhome  
#1 Posted : Friday, August 30, 2019 4:54:10 PM(UTC)

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2019 is my 70 1/2 year for RMD. Called the TSP for confirmation that the TSP withdrawal changes, effective 15 Sep 19, would allow a TSP retiree participant to select a specific account, Roth or Traditional TSP (not both) for their RMD withdrawal.
The TSP rep said this can be done when the new changes take effect.

I then asked how this is possible when the IRS rules state RMDs must be taken from Roth 401(k) and 401(k) type accounts when one reaches IRS age 70 1/2. The rep stated that the TSP is a 401(a) plan, which has different types of money (taxable, military tax exempt, Roth, etc.) funds in it, but is considered as one account. My reply was this answer clarified very little, if anything. I thought this was an important subject that needed a clear and simple explanation for inclusion in the What's New, TSP FAQs. The rep puit me on hold and said this subject is scheduled to be included in the next What's New, TSP FAQ update on 15 Sep 19.

Hoping you can provide a clear explanation to eliminate confusion on this matter. Hard to find any clarification online.
Thank you!

Ed Zurndorfer  
#2 Posted : Saturday, August 31, 2019 6:01:21 PM(UTC)
Ed Zurndorfer

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Both the traditional TSP and the Roth TSP accounts are subject to RMD. You must take a RMD from each account each year starting the year that you are age 70.5 (assuming you have retired from federal service). The TSP should calculate the RMD for each account each year. Note that you can avoid the RMD requirements for your Roth TSP account by directly transferring your Roth TSP account to a Roth IRA.
dtuhome  
#3 Posted : Sunday, September 1, 2019 5:08:45 AM(UTC)

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Joined: 4/12/2011(UTC)
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Thanks for the prompt reply! Your reply post reflects my understanding of the IRS RMD rules.
It essentially deems the info provided by the TSP telephone rep was incorrect, as it relates to IRS rules.

Yhis subject came up for discussion at a retiree luncheon I attended last week.
A couple of attendees had called the TSP and got the same answer: new TSP changes would allow the entire TSP RMD could be taken from either tradional or Roth account AND it was not in conflict with IRS rules.
My initial take was the TSP reply was incorrect as applied to the IRS RMD rules, probably due to how the questions were voiced by the luncheon TSP participants.

Once home, I called the TSP and presented the questions as listed in this post. To my surprise I got the same answer.
I see only two possible answers: TSP rep interpretations providing correct TSP info but incorrect info as it relates to the IRS, or some unclear 401(a) explanation allowing this.

I guess I will have to wait to see if this subject is clearly addressed in the 15 Sep 19 TSP, What's New FAQs, per the TSP customer rep. Also, thought you may wish to contact TSP for your take, as this is an important subject for clarification and a potential future column topic.


Ed Zurndorfer  
#4 Posted : Sunday, September 1, 2019 5:49:25 AM(UTC)
Ed Zurndorfer

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You are most welcome.
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