Ask The Experts: Money Matters

By Mike Miles

TSP withdrawals

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Q. I retired September 2013 in CSRS after 40-1/2 years. I want to take out a one-time distribution equal to about 25 percent of my TSP account. Is is true I can only take out a one-time distribution or payout? I am over 59-1/2.

A. You are limited to one partial lump-sum withdrawal and a full withdrawal, which may be taken in the form of monthly payments. You must take the partial lump-sum withdrawal before beginning monthly payments.

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Withdrawal eligibility

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Q. I was under FERS and I retired after 20 years. I was 55 then, and I am 57 now. When will I be able to withdraw my TSP?

A. Based on the facts you have provided, you may withdraw your funds at any time.

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TSP and VERA

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Q. Can I withdraw from my TSP if I accept a VERA with 30 years of service and my age is 47, or is there a penalty? If so, how much?

A. If you separate from service before the calendar year in which you reach age 55, you will be subject to an IRS 10 percent early withdrawal penalty unless you qualify for one of the exceptions listed on Page 7 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf.

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Partial lump sum

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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.

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IRA rollover

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Q. I retired in December at age 60 under FERS and my TSP is in the L fund because I plan to start drawing down to supplement my pension. My plan is to withdraw 4 percent per year based on a rate of return of 4.46 percent.
The amount of my account is $249,972, which has not been touched yet. I’ve sought the advice of several financial planners who have consistently advised me to roll over my account into a self-directed IRA due to the risk of interest/inflation’s effect on the bonds in the L portfolio, as well as the limitations of the diversification of all the TSP funds themselves. I’ve used the TSP calculator many times using different scenarios with favorable results, but I’m no financial whiz and not confident in my results. Should I move my savings into an IRA or is it better to stay where I am? These financial planners often cite the advantages of rollovers that include accessibility, more control, financial support and more diversification. I just want to be able to supplement my income without too much exposure, which is why I chose the L Fund. What are your thoughts on this? Read the rest of this entry »

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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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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 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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