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Thread: TSP and 72T one more time

  1. #1

    Default TSP and 72T one more time

    Hello everyone,

    First I wanted to thank everyone for all the information shared on the board.

    i am an LEO who is looking to retire in January 2014 with 26 years. I am looking to take 72t withdraws from my TSP. I know you can take life expectancy withdrawals but I was wondering if anyone has taken amortization withdraws, since they seem to be a little more generous and if so was it easy to set up. Any info would be appreciated.

    Thanks everyone


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  3. #2

    Default Re: TSP and 72T one more time

    Quote Originally Posted by Templefan View Post
    Hello everyone,

    First I wanted to thank everyone for all the information shared on the board.

    i am an LEO who is looking to retire in January 2014 with 26 years. I am looking to take 72t withdraws from my TSP. I know you can take life expectancy withdrawals but I was wondering if anyone has taken amortization withdraws, since they seem to be a little more generous and if so was it easy to set up. Any info would be appreciated.

    Thanks everyone
    I am taking withdrawals based on amoritization method. It not too difficult to do. But you should know that these payments are fixed until you reach 59.5 . With interest rates so low you might want to look at using the tsp calculated min withdrawal method. It is a little easier and the way it's calculated you should get a little raise each year. Look at a table of values up to 59.5 and compare. Go to 72t on the Net | SEPP, 72t, and /72q Distributions and check out their calculators.
    100 G
    RSI - Relative Strength Indicator DMA - day moving average

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  5. #3

    Default Re: TSP and 72T one more time

    Thanks Clester, I think that's the way I am leaning. It would be a few dollars less but then it actually is more after 2 years. Plus like you said, less has 7 months and counting. Out of curiosity, how long did it take to get your first tsp check?

    thanks again

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  7. #4

    Default Re: TSP and 72T one more time

    Quote Originally Posted by Templefan View Post
    Thanks Clester, I think that's the way I am leaning. It would be a few dollars less but then it actually is more after 2 years. Plus like you said, less has 7 months and counting. Out of curiosity, how long did it take to get your first tsp check?

    thanks again
    Tsp was very quick. I think about a week or two. Pension is the problem. Temp pension without supplement suck. It tookn6 months for that to get resolved. Got may AL and SL on time though.
    100 G
    RSI - Relative Strength Indicator DMA - day moving average

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  9. #5

    Default Re: TSP and 72T one more time

    Quote Originally Posted by Templefan View Post
    Thanks Clester, I think that's the way I am leaning. It would be a few dollars less but then it actually is more after 2 years. Plus like you said, less has 7 months and counting. Out of curiosity, how long did it take to get your first tsp check?

    thanks again
    Sounds like you are retiring when I am, Jan 11, 2014 with 25 years 7 months plus 5.5 years military Personally, I am leaning to roll my money into an IRA just so I can do more with it and maybe take the 72T amortization. Of course I don't see a rush on taking the 72T, I might just wait a bit and watch interest rates.

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  11. #6

    Default Re: TSP and 72T one more time

    Hi Kaufmander,

    Yes indeed, that's the plan. I am leaning on keeping my money in TSP because of the low fees and probably taking life expectancy withdraws. After the first 2 or 3 years you actually get more then the other methods, but like you said it will depend on rates. For me it will be 25 years and 9 months, almost identical to you. 7 months and counting.

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  13. #7

    Default Re: TSP and 72T one more time

    Quote Originally Posted by Templefan View Post
    Hi Kaufmander,

    Yes indeed, that's the plan. I am leaning on keeping my money in TSP because of the low fees and probably taking life expectancy withdraws. After the first 2 or 3 years you actually get more then the other methods, but like you said it will depend on rates. For me it will be 25 years and 9 months, almost identical to you. 7 months and counting.
    I am thinking of maybe doing the annual re-calculation with the 72T method. I think rates are about as low as they can go and will more than likely rise over the years, that plus getting older will shorten my life expectancy and hopefully with my account balance will keep growing. I'll have larger 72t payments each year. I believe that's the same process TSP uses to do annual recalculations. If your account balance drops, your monthly payments go down. Gotta keep making money to get paid.

    TSP is low, but there are other investing options with low costs. I have to weigh the TSP limitations with the additional investing options outside TSP are an advantage, plus more moves. I want to be able to really diversify my money.

    Congrats on your retirement. I'll be submitting my paperwork next month.

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  15. #8

    Default Re: TSP and 72T one more time

    OK, a couple of questions for the retirement experts. The 72T interest rates are creeping up, the maximum rate for September and October is now 1.95% up from 1.47%.
    1. Do you think the life expectancy payout for TSP will adjust up?
    2. If I elect to go with a 72T amortization payout can I just ask for that amount in monthly payments from TSP or do I have to transfer to an IRA?

    Thanks in advance for you replies

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  17. #9

    Default Re: TSP and 72T one more time

    Quote Originally Posted by Templefan View Post
    OK, a couple of questions for the retirement experts. The 72T interest rates are creeping up, the maximum rate for September and October is now 1.95% up from 1.47%.
    1. Do you think the life expectancy payout for TSP will adjust up?
    2. If I elect to go with a 72T amortization payout can I just ask for that amount in monthly payments from TSP or do I have to transfer to an IRA?

    Thanks in advance for you replies
    1. Yes, I believe TSP uses the monthly Treasury rate you see 72T.net refer to.
    2. If you do a life expectancy withdrawal you get the amount monthly TSP calculates using you account balance, age, and the current interest rate.
    If you want a set dollar amount, you can tell TSP what you want each month, but if you have not obtained the age where the 10% penalty no longer applies you will be hit.


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  19. #10

    Default Re: TSP and 72T one more time

    Quote Originally Posted by Templefan View Post
    OK, a couple of questions for the retirement experts. The 72T interest rates are creeping up, the maximum rate for September and October is now 1.95% up from 1.47%.
    1. Do you think the life expectancy payout for TSP will adjust up?
    2. If I elect to go with a 72T amortization payout can I just ask for that amount in monthly payments from TSP or do I have to transfer to an IRA?

    Thanks in advance for you replies
    You can do a 72t from tsp by requesting monthly payments of the amount you calculate. I use 72t on the Net | SEPP, 72t, and /72q Distributions for calculators. Keep a copy of those calculations for your records. You will not be subject to penalties but there is a IRS form to about using life expectancy withdrawals. Form 4250 or something. Turbo tax makes it easy. I would make sure there is enough difference between min dist method and amoritization method. If they are close and you can stand it I would chose the min dist because you will get yearly raises and TSP will do it all for you. My rate was 3.45 so it was better for me to do amoritization. If you use amoritization method you can't change your monthly amount until age 59.5
    100 G
    RSI - Relative Strength Indicator DMA - day moving average

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  21. Default Re: TSP and 72T one more time

    Thanks Clester, I knew you would have the answer. As you said it will depend on the interest rate. I am looking at January 11th, so I will be monitoring the rates. I hope you are enjoying your retirement. I will be there soon.

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  23. #12

    Default Re: TSP and 72T one more time

    Quote Originally Posted by clester View Post
    You can do a 72t from tsp by requesting monthly payments of the amount you calculate. I use 72t on the Net | SEPP, 72t, and /72q Distributions for calculators. Keep a copy of those calculations for your records. You will not be subject to penalties but there is a IRS form to about using life expectancy withdrawals. Form 4250 or something. Turbo tax makes it easy. I would make sure there is enough difference between min dist method and amoritization method. If they are close and you can stand it I would chose the min dist because you will get yearly raises and TSP will do it all for you. My rate was 3.45 so it was better for me to do amoritization. If you use amoritization method you can't change your monthly amount until age 59.5
    So, Templefan, did you start the process? I have been holding off until I get my final retirement numbers from OPM to decide which method I'll use. With a Min Dist (TSP Life Expectancy) I'd only get an increase each year if my account balance increases. The stability of an Amortization might be better for budget planning, but I'd decrease my account balance faster then Min Dist unless I get stellar returns.

    If I start out with Amortization I can do a one time change to Min Dist (allowed by IRS). Not sure if TSP would allow you to do it, but I can with my Roll-Over IRA.

    Doing a 72T calculation a Min Dist with an 8% annual gain would not equal or exceed an Amortization for 6 years. If interest rates go up, the Min Dist would never catch the Amortization.

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