Taking money from TSP


Q: I will retire shortly from the U.S. Postal Service. My question is about withdrawing my money from my TSP account. My husband, who is already retired, and I went to see a financial adviser about retirement planning. I just turned 62 in December and my husband is 66. The financial adviser said we should take all my money out of my TSP account and hand it over to him. He would then invest it for us. Some would go into buying an immediate annuity which would give us an income of $1,000 for the next 10 years. Then he would use some to buy another annuity that wouldn’t start paying for 10 years and would pay us $1,500 for the following 10 years. Then he would invest the rest into another annuity that would begin paying in 20 years. This sounds all well and fine. But after considering all of this, I am thinking of just leaving my money in the TSP and withdrawing a specified dollar amount. If I am correct, this amount could be changed once a year. My money (a little more than $300,000 is almost all invested in the L Income fund. It had been in the 2010 fund. The money I am adding per pay period is split between the C,I & S funds (approximately $5,000 total in those three accounts right now). I was doing that to try and get a little extra growth before I retire. I am comfortable with having $10,000 in those three “growth” funds. My question is: Once I retire and begin receiving monthly payments, from which fund(s) is the money taken?  Can I specify which funds I want the money withdrawn from? Or, will I have to check my TSP fund monthly to readjust the mix? Also, once I begin receiving monthly payments, can I still take a partial withdrawal at some time?

A: Your TSP withdrawals will be taken proportionally from each fund in which you are invested at the time of the withdrawal. You may not specify the source for the withdrawal. Once your monthly payments begin, your only option to stop them is a final, lump-sum withdrawal. By the way, I can’t imagine a good reason to take your money from the TSP, particularly to invest it in an immediate annuity with interest rates near all-time lows. Find a real adviser, rather than a salesperson.


About Author

Leave A Reply