Q. I am retiring Nov. 30 and considering using a lump-sum withdrawal from my TSP to pay off my mortgage. I have read material at the TSP website and Googled my questions but not found a clear answer about the tax withheld. What is the federal tax percentage on a lump-sum withdrawal? I am 63 ½ and not withdrawing all funds. I would be making one withdrawal, leaving the balance to continue the investment, and no intention of future withdrawals.
A. The TSP will withhold 20 percent of the distributed amount for federal taxes.