Withdrawing TSP funds


Q. I will be turning 70 and a half years old in January 2015. I know I will have to start my RMD. I have talked to several financial planners that are suggesting I transfer all of my funds in TSP to a IRA and let the IRA distribute the RMDs. The advantage to that would be that I could receive the payments monthly, quarterly or yearly, rather than only monthly from TSP.

If I go with TSP, I will have decided to arrange my monthly payments equal to a 12-15 year payout versus 26 and a half years. I don’t want to do an annuity so was trying to get close to the 10-year payout an annuity would offer without incurring too much tax. Also, since I am receiving a pension and full Social Security, I don’t necessarily need the monthly RMD on which to live. Do you have any suggestions on investing that money, perhaps in CDs or a money market?

A. Either these financial planners are interested in something other than your welfare, or they don’t understand the TSP and how to use it to your best advantage. Why is it better to receive the payments quarterly or yearly? Stick with the TSP for as long as you can and take the monthly payments.


About Author

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 fedexperts@federaltimes.com and view his blog at money.federaltimes.com.

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