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Wheels wrote:Artful Dodger wrote:You can withdraw from your TSP without incurring the 10% penalty if you withdraw your savings during or after the year in which you turn 55.TSPTom wrote
As for the 55 thing, I concur. As long as you take an annuity with "substantially equal payments"you can take money out of TSP penalty free before 59 1/2.
I think you guys are talking about two different things. Dodger, I believe the rule you are refering to states that you can take your balance without penalty if you RETIRE at or after the year you turn 55. If you retire before the year you turn 55 you can do a couple of things (Tom may be refering to both of them at once). You can buy an annuity from TSP but with this option you forfeit your account balance for a lifetime of payments. Virtually every financial advisor would advise against this. OR, as has been mentioned by a few others, you can take sunstantially equal payments according to the IRS life expectancy tables. (Tom, this may have been what you were refering to). The downside here is that you would be limited to about 3% of your account balance annually initially (actually, this might be a plus since you would have some penalty free income and your account would still be growing). Keep in mind also that if you terminate this method for any reason you can not return to it ever.
That was mouthful. Hope this helps.
DaveI think you pretty much hit the nail on the head Dave. I thought I was clear when I talked about retiring on or after the year in which you turn 55 but I guess I could have made it a bit clearer. My apologies for any confusion on the matter. As I said earlier I am 58 and taking the MRA this May and will be setting up to receive a monthly check from the TSP and the only "penalty" will be the tax that the Feds take out of it before it reaches my checking account
TSP Talker
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Again,I presumed you were speaking only for those that retired, but the one sentence i quoted from you was a blanket statement that suggested if you're over 55 in TSP, you can withdraw your TSP penality free. That's just not true. I just wanted to ensure that everyone was clear.I thought I was clear when I talked about retiring on or after the year in which you turn 55 but I guess I could have made it a bit clearer.
Newbie
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azanon wrote:Yes, you are correct. I should have made it clearer that if your over 55 and you are RETIRED OR RETIRINGthere is no penalty. Again I apologize for any confusion.Again,I presumed you were speaking only for those that retired, but the one sentence i quoted from you was a blanket statement that suggested if you're over 55 in TSP, you can withdraw your TSP penality free. That's just not true. I just wanted to ensure that everyone was clear.I thought I was clear when I talked about retiring on or after the year in which you turn 55 but I guess I could have made it a bit clearer.
Inactive
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Man this is getting confusing. Apparently we all need to word things as carefully as possible. Artful,you state "if your over 55 and you are RETIRED OR RETIRINGthere is no penalty." That is not correct. Even if you are over 55, if you retired before the year youturned 55 you may not withdraw your money without penalty. In an earlier post you stated, "You can withdraw from your TSP without incurring the 10% penalty if you withdraw your savings during or after the year in which you turn 55." Azanon is trying to point out that you cannot withdraw your funds if you are still employed. I think we all mean the same thing but again the wording is tricky and needs to be exact. Now to confuse it a little further, notice the requirement states the year in which you turn 55. But you don't actually have to be 55. In other words, if your 55th birthday is Dec 15th 2007, then you can retire in Jan of 2007, shortly after your 54th birthday, and still withdraw your funds without penalty. Just food for thought.
Dave
Newbie
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Yes, you are right. I didn't do a very good job of explaining myself so I think it's best I let it go right where it is......your explanation is what I tried to say but failed.
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