Monthly TSP payments and tax


Q. I will be starting monthly payments from my Thrift Savings Plan account. I’m confused as to this making your payments last for 10 years. Is this really putting me into a better tax situation?

You must pay on your taxes at the end of the year. I spoke to someone at TSP, and she was explaining that it is to my benefit. If your payments last 10 years or longer, they only tax you as though you’re married with three dependents. If it’s not lasting for 10 years, they take out 20 percent every month.

Isn’t this a wash at the end of the year? I spoke to my tax person, but, I don’t think they totally understand TSP. I thought tax was tax.

A. Tax is tax. It’s the withholding that differs. But, as you say, that washes out when you file your return.


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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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