FER's Retiree: When to withdraw from TSP, start Social Security

Quote:

---

Originally Posted by weatherweenie

If you are withdrawing from your TSP, are you having to pay a penalty/fee/extra tax, or did you handle this through a 72t?

Also, you said that you initially were withdrawing $800, then changed to $400/month. I thought, especially with early retirement, once you commit to withdraw an amount, you were not able to change, increase/decrease the amount of the withdrawal?

---

At age 59.5, you have the flexibility of selecting the amount. Under 72T, life expectancy calculation, your amount will change each year based on the end of year balance and age factor--both change. There are alternate methods but with low interest rates, my understanding that there really isn't that much difference with the other Substantially Equal Periodic Payments (SEPP) methods. If you begin 72T payments, you have to keep doing it for 5 year or until 59.5, whichever is longer. see Rule 72(t) Definition | Investopedia & https://www.irs.gov/retirement-plans...iodic-payments

I just got confirmation that my tsp full withdrawal was complete and transferred to an IRA, under the advisement of my financial advisor. He is very sharp and has some other options for me as well including a life insurance policy that will bring me 7% and have a cash value. I trust him completely so now I will not have to worry about the market swings. It's literally all in his hands. I'm 57 now and retired 2 years ago and I don't anticipate needing the money but he says I will be making money that I can withdraw for vacation trips. Time will tell. It really feels good to have a professional who knows what he is doing to give me peace of mind. Time will tell, since as I speak I'm working on getting life insurance and once I do I will cancel my federal life insurance. And ohhhh the new insurance with 7% minimum gain/yr and cash value will cost me basically the same as I'm paying for fed life insurance, no brainer to me.

Good luck GUCHI. I'm not a big fan of whole life insurance policies, but if it put you in a comfortable place, I guess that's all that matters.

Quote:

---

Originally Posted by weatherweenie

If you are withdrawing from your TSP, are you having to pay a penalty/fee/extra tax, or did you handle this through a 72t?

Also, you said that you initially were withdrawing $800, then changed to $400/month. I thought, especially with early retirement, once you commit to withdraw an amount, you were not able to change, increase/decrease the amount of the withdrawal?

---

weatherweenie----you can change how much money you get a month with TSP form 73. You can do this each year between October 1st to December 26th. The change will take place the following year. The minimum dollar amount you can take out is $25 a month.

Quote:

---

Originally Posted by weatherweenie

If you are withdrawing from your TSP, are you having to pay a penalty/fee/extra tax, or did you handle this through a 72t?

Also, you said that you initially were withdrawing $800, then changed to $400/month. I thought, especially with early retirement, once you commit to withdraw an amount, you were not able to change, increase/decrease the amount of the withdrawal?

---

If you are under 59.5 years old and change your 72t monthly payment it will trigger penalties for all the years you used that rule. After 59.5 you can do the yearly change without penalty.

I took the 72t route, with advisement from adviser.

Are you able to write a check to the TSP to cover your years age 50 catch up contribution if you retire mid year? or is it just payroll deductible only?

sorry to be bearer of bad news, vegas. payroll deductions only.

Quote:

---

Originally Posted by clester

If you are under 59.5 years old and change your 72t monthly payment it will trigger penalties for all the years you used that rule. After 59.5 you can do the yearly change without penalty.

---

I am retiring this year at age 57 with 37 years service. I am choosing monthly payments until at least 59.5. Now, the 72t that you are referring to, is this what they mean by the equal monthly payment amounts? I see no mention of a 72t option in the withdraw choices given on the withdraw form. So, if I change the monthly amount after the first year when I am still 58, I will be hit with penalties for doing so? Probably wouldn't change anyway until 59.5 or 62 but I'd like to know if I would..

Thanks!

Quote:

---

Originally Posted by Blarney

I am retiring this year at age 57 with 37 years service. I am choosing monthly payments until at least 59.5. Now, the 72t that you are referring to, is this what they mean by the equal monthly payment amounts? I see no mention of a 72t option in the withdraw choices given on the withdraw form. So, if I change the monthly amount after the first year when I am still 58, I will be hit with penalties for doing so? Probably wouldn't change anyway until 59.5 or 62 but I'd like to know if I would..

Thanks!

---

I'm not quite sure in your situation. In FERS there is a provision that says if you retire in the year you turn 55 you are not required to pay penalties but I don't think that applies here. For 72t (IRS rule for early withdrawal. Under age 59.5) could apply at any age. It says that if you take monthly withdrawals based on life expectancy tables then you are exempt from penalties if you don't change your method. There are 3 methods. Check out www.72t.net for more info. You have to do this rule for 5 years or until 59.5 I think. Its been a while since I researched it. At that point you can have TSP change your payments each year to any amount you want. TSP only offers the "minimum distribution method" under this rule. I used the amortization rule. Interest rates were higher then. Use their calculators to determine your best choice.

Thank you, I'll check those out!!

Quote:

---

Originally Posted by Blarney

I am retiring this year at age 57 with 37 years service. I am choosing monthly payments until at least 59.5. Now, the 72t that you are referring to, is this what they mean by the equal monthly payment amounts? I see no mention of a 72t option in the withdraw choices given on the withdraw form. So, if I change the monthly amount after the first year when I am still 58, I will be hit with penalties for doing so? Probably wouldn't change anyway until 59.5 or 62 but I'd like to know if I would..

Thanks!

---

I retired in 2013 at age 56 (Fed LEO). I took a partial withdrawal in a lump sum and paid only income taxes. I also transferred about 60% of my total TSP to a traditional IRA (tax free).
In year three of retirement (age 58) I started taking a monthly distribution.
The following year I changed the distribution amount to take the minimum ($25.00), and started drawing from my IRA at 59.5. I paid only income taxes on the initial monthly withdrawal in year three, and after I changed the amount the following year. I was not required to pay any additional penalties on either. Being retired Fed LEO may have made a difference, but I don't believe that was the case. I was under the impression penalties only applied if you retired before the year in which you turn 55, or if you were withdrawing from an IRA, and not TSP.
I'll also try to research it later today.