Thread: TSP - 72(t) - what form?

LB. I say go for it. You sound like me before I retired. I loved my work it was very fulfilling BUT the bs was getting to be too much for me to take. I was young and active and wanted to get out before they beat me down so I did in 2014 at 55 yrs and 35 yrs of service with NRCS. And oh some good chatter on the retirement thread. I asked myself the question how much money will it take to be happy??? My answer was its not how much one has but rather what you do with it. Good luck and do check out the thread.

Originally Posted by Kaufmanrider

I'll chime in. Once you meet the 5 years or 59.5 (later of two) you can do what you want with the money. Now, TSP might have different rules on frequency of withdrawals after the criteria has been met? I'd contact TSP.

I rolled my TSP into an IRA and am taking my distributions monthly, however if the need arose I could take the whole yearly dollar amount out at one time, semi-annually, quarterly, etc. As long as I only take out the calculated annual amount each year, no more, no less.

I believe only earned income effects the FERS SRS.

What TSP allows you you is my question, since they are really silent on the whole 72t issue. I don't know if TSP allows you to start/stop monthly distributions. And it appears that you cannot take a annual distribution, only a complete or monthly from them as well.

So what will TSP let you do? I know I can roll it over to somewhere else but I have been comfortable with TSP so far, but I might if they are to inflexible with my money.

After age 59.5 or 5 year requirements you have one chance to change. Go to monthly payments of your choice which you can change monthly or lump sum or roll over to IRA. I will change to monthly payments of my choice. If you don't need much you could just take say $100 a month and later you want to buy a car or need more then the next year bump it up to $2000 a month etc. you get a notification in November that says you can change.

Since I'm doing monthly payments already I'll just start changing the amount after age 59.5 if I want...easy

Originally Posted by clester

After age 59.5 or 5 year requirements you have one chance to change. Go to monthly payments of your choice which you can change monthly or lump sum or roll over to IRA. I will change to monthly payments of my choice. If you don't need much you could just take say $100 a month and later you want to buy a car or need more then the next year bump it up to $2000 a month etc. you get a notification in November that says you can change.

Since I'm doing monthly payments already I'll just start changing the amount after age 59.5 if I want...easy

So you originally went with life expectancy calculated payments, correct?

Frank

Originally Posted by Lakebound

So you originally went with life expectancy calculated payments, correct?

Frank

I used the 72t amortization calculation using the calculators on 72t on the Net | SEPP, 72t, and /72q Distributions and then requested monthly payments from tsp based on those calculations.

Originally Posted by clester

I used the 72t amortization calculation using the calculators on 72t on the Net | SEPP, 72t, and /72q Distributions and then requested monthly payments from tsp based on those calculations.

Thank you.

Originally Posted by clester

With the really low rates you may want to do the minimum distribution that tsp offers. Then you get to make a one time change I believe. I'm taking 72t withdrawals now if you have any more questions.

Rev. Rul. 2002-62 permits a one-time change from either the amortization method or the annuitization method to the required minimum distribution method. If you begin with the required minimum distribution, i.e., life expectancy, you can not change your method to the amortization or annuitization during the 5 year/age 59.5 time period.

Retirement Plans FAQs regarding Substantially Equal Periodic Payments

I opted to start my 72T via the annuitized method (highest amount) because it is a one time calculation and the amount will stay the same, whereas with the minimum distribution (life expectancy) it is recalculated annually and can go up, or down, depending on how your account balance goes each year. I retain the option to change to the life expectancy.

FYI I retired at 49 (Jan 2014 the year I turned 50) under the Special FERS Retirement for LEO's.

Originally Posted by Kaufmanrider

Rev. Rul. 2002-62 permits a one-time change from either the amortization method or the annuitization method to the required minimum distribution method. If you begin with the required minimum distribution, i.e., life expectancy, you can not change your method to the amortization or annuitization during the 5 year/age 59.5 time period.

Retirement Plans FAQs regarding Substantially Equal Periodic Payments

I opted to start my 72T via the annuitized method (highest amount) because it is a one time calculation and the amount will stay the same, whereas with the minimum distribution (life expectancy) it is recalculated annually and can go up, or down, depending on how your account balance goes each year. I retain the option to change to the life expectancy.

FYI I retired at 49 (Jan 2014 the year I turned 50) under the Special FERS Retirement for LEO's.

Interesting ..... So, I could calculate using life expectancy for just a benchmark. And then, begin my 72T using an amount higher and basically keep my options open to move to the life expectancy calculation later anyway? But then, I won't be exempted from the penalty prior to 55 (I retire at 50). My thinking was to go with the life expectancy calculations and continue working to stay active and busy until 60 and then simply move to an amount each month that I feel that I need to supplement my pension based upon what we want to do in the Golden Years.

Great conversations to consider here. I really appreciate hearing about everyone's experiences and advice moving into retirement.

Frank

Originally Posted by Lakebound

Interesting ..... So, I could calculate using life expectancy for just a benchmark. And then, begin my 72T using an amount higher and basically keep my options open to move to the life expectancy calculation later anyway? But then, I won't be exempted from the penalty prior to 55 (I retire at 50). My thinking was to go with the life expectancy calculations and continue working to stay active and busy until 60 and then simply move to an amount each month that I feel that I need to supplement my pension based upon what we want to do in the Golden Years.

Great conversations to consider here. I really appreciate hearing about everyone's experiences and advice moving into retirement.

Frank

All the monthly payment method (life expectancy, annuitization, amoritization) methods are approved methods under the IRS 72T and exempt from the 10% early withdrawal penalty, no matter your age. I have read postings by people who started 72T plans (in IRA's) in their 40's. Not Feds, on the 72t.net forum.

Work to keep busy? I thought about that, but I find myself keeping fairly busy retired.

Originally Posted by Kaufmanrider

All the monthly payment method (life expectancy, annuitization, amoritization) methods are approved methods under the IRS 72T and exempt from the 10% early withdrawal penalty, no matter your age. I have read postings by people who started 72T plans (in IRA's) in their 40's. Not Feds, on the 72t.net forum.

Work to keep busy? I thought about that, but I find myself keeping fairly busy retired.

I guess that shows you how much I know! I'm looking forward to being a novice retiree.

Frank

I retired at age 53 and currently receiving monthly payments from TSP under 72t rules. I wish I had rolled over the funds to an IRA brokerage account before I set the withdrawals in motion under 72t rules so that I had more investing options. I read somewhere that if I did a rollover now before the age 59.5 was achieved that I would owe the back penalty even though I was planning on setting up the new roll over account to receive the same monthly withdrawals under 72t. Can someone comment on this... I'm age 54.5 now so it appears I've got another 5 years to wait to do a penalty free rollover? Thanks!