Q. I retired from the federal government under CSRS. I turned 70½ years old in May. I have $40,000 in my Thrift Savings Plan account. I am thinking about withdrawing all of my funds in a lump sum. Is this a good idea? How will this affect my tax obligations? What do you recommend?
A. The money you withdraw from your TSP account will be counted as ordinary income for tax purposes. If you need the money, then fine. If not, you should leave it in the TSP for as long as possible.