Q. I am federal employee and plan to retire in about six months or a year. I want to leave the money in TSP when I retire, but want to include TSP in a living revocable trust. I read online that it is not a good idea because the IRS considers that as a lump-sum transfer and I will be taxed at almost 35 percent. But when I consulted an estate-planning attorney, I was told that I can include TSP in the trust, and it does not make any difference in how I withdraw the money. I am confused. Please…
Q. How do I request a TSP partial lump sum after age 59-1/2? What forms do I need to fill out, and how long does the process take? I plan to keep working until age 63 and continue contributing to my TSP. A. Use form TSP-75 to request an age-based, in-service withdrawal. Allow weeks for the withdrawal to be processed.
Q. I retire in less than a month under FERS. As soon as I retire, I plan to use the option to withdraw my TSP in monthly increments that I decide every year (I am not using the life expectancy or annuity options). I also want to do a partial withdrawal (not much of it, just enough so I have a good savings account to fall back on). I know I can only do it once. I assumed, or read, that the one time had to be immediately upon separation. I do not really need the partial-withdraw funds right away,…
Q. I would like to take $3,000 monthly from my TSP when I retire for the first few years, then I start collecting Social Security can I reduce my monthly payment? Then later on change the monthly amount again? I thought I read I can change my TSP payment once a year, but have been hearing from others who have retired you only have a choice of lump sum, annuity, partial lump sum and the rest in monthly payments of your choice, but it stays the same for life.
Q. I’ll retire under FERS at the end of this year. Will the lump-sum payment for annual leave that I’ll receive early in 2015 would be considered earned income for the purposes of being able to contribute to my non-TSP Roth IRA? A. No.
Q. I reached my MRA last January with 30 years of service. I plan to retire in January. For 2015, I am planning to withdraw $100,000 and then have monthly benefits of $1,000 from my TSP. Can I do that in the same year? Or do I have to wait in 2016 to start my monthly benefit? A. A partial lump-sum withdrawal and a full withdrawal in monthly payments can both occur in the same year.
Q. I am a FERS employee with a retirement date of May 2018. I will reach my minimum retirement age of 56 at that time, with 36 years of service. Am I eligible, at that point, to receive nonpenalized withdrawals, either payments or lump sum from my Thrift Savings Plan account? Or do I have to wait until I reach age 59½ to not be penalized? A. You will be exempt from the early withdrawal penalty under those circumstances.
Q. I anticipate starting monthly withdrawals from the Thrift Savings Plan in the near future. Sometime after this, I would like to make a one-time lump-sum withdrawal from TSP to pay for my daughter’s wedding. Can I do this? Can I make a lump-sum withdrawal while taking monthly payments, or am I limited to one or the other? A. You can take the lump-sum partial withdrawal before starting the monthly payments, but not after.
Q. Whether I retire sooner or later than the year I turn 55, what kind of tax implications will I have in taking a partial lump sum or the whole balance lump sum for something like a vacation home? A. If you retire from Thrift Savings Plan-covered employment during or after the calendar year in which you reach age 55, you will be exempt from the Internal Revenue Service 10 percent early withdrawal penalty for any withdrawals you take.