Q. I’m in the FERS retirement plan and will retire March 31 from the Defense Department. At the time of retirement, I will have more than $300,000 in my 401k. I have two multiple-part questions: 1. Can I decide how much I want to take in monthly withdrawals and, if so, do I pay the 20 percent penalty monthly or do they take the 20 percent off the $300,000 before I even start getting my monthly payments? 2. If I leave my money in the TSP, do they continue to invest my money, and will I continue to earn interest off of my money and can I move the money around if I so choose?
A. Once you retire, you may request monthly distributions, in any amount you like, using Form TSP-70. The early withdrawal penalty, if it applies, is 10 percent of the amount withdrawn. You will calculate and pay this when you file your tax return for the year. Withholding from your monthly checks will be calculated and taken according to the schedule on Page 2 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-780.pdf. Any money remaining in your TSP account is invested, as usual, according to your instructions. Each distribution is taken, pro-rata, from each of the funds held in your account, so that your asset allocation is not affected by the distribution. You are responsible for continuing to manage your TSP account balance, just as when you were working, for as long as the account contains assets.
TSP distributions
0
Share.
