Q: I  plan to retire at age 73 under FERS when I will have a very small nest egg upwards of $100,000 in TSP.  I would like to leave that in the TSP in the long term. I understand that I have to take a withdrawal upon retirement; otherwise there is a penalty. I have been informed that I can take a withdrawal of $25 per month and still leave my money in TSP to accumulate there. Is this correct? I plan to save money from Social Security in the interim and may want to (if permitted) put that savings from Social Security in the TSP also. Is this correct?

A: You will be required to begin Required Minimum Distributions each year after you retire. The minimum amount to be withdrawn each year is figured using an IRS formula. The TSP will take care if it for you if you will file form TSP-70 just after retirement to request monthly payments automatically computed based on your life expectancy. Alternately, you can request fixed dollar monthly payments, and the TSP will send you an extra payment at the end of the year to make sure that the minimum is met, if necessary. You may not contribute to the TSP after you retire, of before you retire, except through payroll deferral.


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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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