Q. I am a 62-year-old FERS employee with 29 years of service. I took an age-based withdrawal from my TSP account at 59 from which TSP withheld 20 percent off the top and then the remainder was taxed; however, I got the taxed portion back in the next tax year. My question is: If I retire at age 66 with 33 years of service and withdraw my TSP funds at that time, will 20 percent be taken off the top by TSP again? Will I be able to leave funds in TSP and have monthly or annual withdrawals, or would my best bet be to take an annuity?
A. See page 3 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf for the rules about withholding from TSP distributions. You may leave money in your TSP account for life and take monthly withdrawals. The decision to buy an annuity is too important, and complex, to trust to an Q & A forum.