Browsing: TSP withdrawal

Q. I am 68 years old retired and a FERS retiree. Currently, my wife and I do not need my TSP retirement to withdrawal. We know we need to start withdrawing at age 71½ and we will probably set up a monthly payments from my TSP account (not annuity). However, if I die before 71½, can my wife still receive the monthly payments? A. Your TSP required minimum distribution will begin when you reach age 72. As long as your wife is the beneficiary of your account, she will be able to take money from it after your death.

Q. What agency would I need to seek remedy on requesting a TSP withdrawal with paying no federal tax and the IRS withdrawal penalty? I am a 58-year-old FERS employee with four years to go before I can retire. I can get a TSP withdrawal at age 59½ years old without paying the IRS penalty, but I need the money now due to immediate financial needs, including not paying the federal/state taxes and penalty.  A. Since you are currently eligible to contribute to the TSP and are under age 59½, there are only two ways to remove money from your…

Q. What is considered a good percentage to withdraw from your TSP beginning at age 56? I’m married, so we have dual TSPs and dual pensions. Is there a formula that is generally accepted? I was considering 3 to 4 percent a year and have my funds in the L2020 and L2030 at this time. A. There is no generally safe rate higher than zero since the answer will depend upon how you manage the money along the way.

Q. To calculate the monthly installment and figure how many months before you deplete your account, what is a reasonable rate of return to insert into the calculator? Or is there a better way to figure this out? A. You’ve pointed out the problem that makes this calculator useless at best and dangerous at worst. Competently run Monte Carlo Simulation is needed to figure this out. Without that and some corresponding account management, you should consider using your funds to buy a fixed immediate annuity to provide lifetime income.

Q. My late husband was a FERS retiree when he passed in 2017. I am also a federal employee, but am under CSRS. I’m planning to retire soon, and am wondering if I have our TSP funds in the correct L Funds. I was told it should correspond to your retirement year, but just read that it should be based on my life expectancy. Which is accurate? Also, is it correct that if I withdraw from my husband’s TSP it would not be subject to the 10 percent penalty? A. There is no “accurate” or correct way to choose an…

Q. I have a couple nickels in the Thrift Savings Plan and I am very concerned about a turnaround that I believe is coming. Where to do I information as to how much of my TSP can be moved to another IRA or secured account for better growth? Will it hurt me to remove most and leave a little? Where I find answers about moving my current funds, and starting a fresh minimalist account? A. The rules governing the TSP are available at www.tsp.gov. There is no need to move your money out of the TSP to secure it against…

Q. I am currently working, have both a Traditional and Roth TSP but will be subject to required minimum distribution upon retirement. The five-year Roth requirement will not be satisfied by the time I retire. I would like to transfer the entire Roth account, both qualified and nonqualified, to an outside Roth IRA before I retire to avoid paying RMD on the Roth portion. Can I do this without penalty, or am I limited to transferring the qualified portion only?  A. Rolling money over from the TSP to an IRA should be free from any penalty, if you do it…

Q. I am 58 years old and seeking retirement soon after my 62nd birthday. I would like to withdraw my Thrift Savings Plan when I am 59 1/2, in a lump sum. How much will I have to pay in penalties and taxes?   A. It sounds like you will be taking an age-based, in-service withdrawal. The amount withdrawn from your Traditional account will be taxed as Ordinary Income. There will be no penalty for early withdrawal.

Q. I am retiring from federal service at my MRA of 56 with 30 years of service. I plan to continue to work as a support service contractor to my federal agency. Can I withdraw money from my Thrift Savings Plan savings without penalty while I am working as a support service contractor? I know I will have to pay income tax on my withdrawals, but wanted assurance that my withdrawals will not be subject to a penalty since I meet MRA and years of service requirements. A. Under the circumstances you describe, your TSP distributions will be exempt from the…

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