Ask The Experts: Money Matters

By Mike Miles

Wait for TSP withdrawal

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Q. If I’m still working at 70-1/2, do I have to start drawing my TSP, or can I wait until I retire at 72 or 73?

A. You may wait until you retire. Your first RMD payment is due by April 1 of the year following the calendar year in which you reach age 70-1/2 or retire, whichever is later.

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TSP withdrawal

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Q. I was told I can’t take money out of my thrift savings while I’m out of work on disability. Why not?

A. If you are still a federal employee, you are subject to the rules governing in-service withdrawals.

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One-time withdrawal

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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, but do not want to miss the opportunity to do it. Can you do your once-in-a-lifetime partial withdraw any time after you retire? Read the rest of this entry »

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IRA rollover

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Q. I am going to retire soon and plan to roll over my voluntary contributions to an existing Roth IRA. Can the voluntary contributions be rolled over to a TSP Roth account instead?

A. No.

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TSP beneficiary designation

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Q. After filling out many beneficiary forms, I have found the standard beneficiary line to be Spouse, and then equal shares to offspring. This was my desired process anyhow. Does TSP have a similar beneficiary plan assuming no prior beneficiary designation? Read the rest of this entry »

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TSP taxation

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Q. Are all TSP withdrawals subject to the 20-percent federal tax withholding, including full withdrawal by way of monthly payments? And is this done automatically when you set up your payout options with TSP or do you need to complete a form?

A. Not all TSP withdrawals are subject to mandatory withholding. See the table on Page 3 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf for the rules. Mandatory and default withholding happens automatically. Anything else, you’ll have to request.

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TSP lump sum

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Q. I am a FERS employee and plan to retire at age 56. Can I take a lump-sum withdrawal from my TSP to pay off my home?

A. Yes, once you retire.

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Partial TSP withdrawal

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Q. I have 36 years of FERS service with retirement at MRA 56 and four months. If I wanted to take a partial withdrawal of TSP at retirement (early withdrawal, before 59.5), do I have to elect to do this immediately when I retire or could I wait a year and request this?

A. You may wait as long as you like.

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MRA+10 and TSP

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Q. I am going to separate from federal service on my MRA+10. I will be 56 with 25 years of service. Can I start taking money from my TSP at that time without penalty?

A. Yes.

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Pension eligibility

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Q. I have a friend who resigned from civil service in 2004 (after 20+ years). He then took all his TSP fund, closed the account and rolled it over into an IRA. He will be 60 in 2014 and he heard that he might be able to collect a retirement pension from the federal government (GS-5) in 2016 when he is 62. Is he eligible for pension and is the retirement contributions and TSP the same? Since he took his TSP funding, will that make him ineligible to collect a pension? What is the retirement contribution? Read the rest of this entry »

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