Forced into choosing TSP withdrawal options


Q: I am no longer employed and have reached age 70½.  I received notice from the Thrift Savings Plan that I have to remove my money or start taking monthly payments, buy an annuity, or some combination of removing my money and buying an annuity. I know about the Required Minimum Distribution and was fully prepared to take that amount out. Am I not able to leave the remainder of my account intact after I take the Required Minimum Distribution? This is really a shock to me if I have to remove the money and pay taxes on it, or have to buy an annuity or take monthly payments out.

A: The problem is that the TSP’s rules only allow one partial withdrawal, so if you haven’t already used up that withdrawal, you’ll only be able to take your first RMD and then will have to take a full withdrawal for the second. Monthly payments are considered a full withdrawal. You could, if it’s still available, take your first RMD as a partial withdrawal, and then either start monthly withdrawals based on your life expectancy to minimize the RMD withdrawals each year. The fact that you’re taking the money monthly, rather in one lump sum each year should be no big deal. An alternative would be to roll over your TSP to a low-cost IRA and then withdraw money as you please.


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Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to and view his blog at

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