By Mike Miles
August 9th, 2013 | Uncategorized
Q. 1. I am retired at 52. If I take a life expectancy withdrawal through the Thrift Savings Plan from now until I reach 59½, can I then roll over the balance of my account to a privately held traditional TSP such as Vanguard? Or does taking the life expectancy withdrawal through the TSP commit me to them for life?
2. If I receive life expectancy withdrawals now through the TSP, can I still take a partial withdrawal (amount of my choosing) when I am 59½ without the 10 percent penalty?
3. If I roll over my entire TSP account now to a privately held traditional TSP such as Vanguard and establish a 72(t) withdrawal arrangement using 120 percent of the applicable federal rate, does the yearly/monthly amount change each year if the AFR changes or will I receive the exact amount every year/month until I reach age 59½ (at which time I can change to equal monthly payments)?
A. If you want to avoid the early withdrawal penalty using the 72(t) rules, you’ll need to continue the calculated distributions for 10 years, or until you reach age 59½, whichever is longer. Moving the money from one custodian to another has no effect on the distribution requirement. During the required distribution period under 72(t), you may not take any more or less than the calculated annual distribution without violating the rules and invoking the penalty. Once you have committed to a fixed distribution scheme under 72(t), it must continue, unchanged for the entire distribution period, which in your case will be 10 years.
April 24th, 2013 | Uncategorized
Q. I have to withdraw my Thrift Savings Plan because of my age (70½).
I am indecisive as to:
1. Withdraw all to a saving account
2. Get a partial withdrawal for 120 months, or
3. Withdraw part of it and gradually withdraw the rest over a 10-year time span.
My considerations are:
1. No taxes, as I understand it, over a period greater than 10 years on a gradual withdrawal
2. Putting me into a higher tax bracket.
What advice or comments can you give me?
A. Unless you can come up with a good reason – that is, using actual estimates of costs, taxes, etc., rather than just qualitative statements – I don’t know why you would take any more than the required minimum distribution each year.
March 11th, 2013 | Uncategorized
Q. My husband will be retiring in June 2014. He will turn 50 in March 2014. Can we still contribute the full $17,500 plus $5,500 catch-up (I realize next year contribution limits may increase) even if he is only in for half a year?
A. Yes, as long as his pay will support the deferrals. The limits are not adjusted for partial years.
November 10th, 2009 | Uncategorized
Q: I am a federal employee under the Federal Employees Retirement System. In the year and month of my retirement, I will have about $170,000 in my Thrift Savings Plan. In the year of my retirement, can I do a one time withdrawal of $30,000 and not request a monthly withdrawal that year, and then the following year of my retirement start my monthly withdrawals?
A: Yes, if you have not used up your one-time partial withdrawal prior to taking the $30,000 withdrawal.
— Mike Miles
October 14th, 2009 | Uncategorized
Q: I’m planning to retire this calendar year and want to leave my Thrift Savings Plan as is. Will I be able to take TSP distributions at will, or am I only allowed to take a one-time distribution (roll-over)?
A: You’re only allowed to take a partial distribution one time. You may also elect a full distribution in the form of adjustable monthly payments and a final single payment, however.
— Mike Miles