TSP withdrawal


Q. I am a FERS employee planning to retire at age 60 in October 2017. I may use a one-time withdrawal option to withdraw some of the money (roughly 20 percent of the total ) from TSP to pay off some debt in 2017 before retiring and keep the remaining money as a pensionlike cushion (for years 2018 and 2019) until I reach age 62 and am eligible for Supplemental Security Income. Withdrawing and keeping the funds as cash in 2017 will add to my income and take me into a higher tax bracket . What options do I have to keep my taxes low for 2017? Is it a good idea to roll over to an IRA account and take money out successively in the next three years, or is there a way to do that in TSP?

A. Why not wait until 2018 to take your withdrawal? Or take a loan in 2017 that you don’t repay, and then take your partial, lump-sum withdrawal in 2018? You should use fixed-amount monthly withdrawals to meet your cash flow needs, if you can make it work, and leave your money in the TSP for as long as you can.


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

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