Thread: Retirement Talk

Robo,

Moved your post to the retirement section.

I don't know the exact answer right now. At the end of this month I will retire.

I decided to leave funds with TSP and take a monthly payment. I am assuming you can continue with IFT's, just like regular stuff.

I don't know how they will take out the monthly deduction. I planned to leave the G-fund with at least 20%.

I was told to wait 2-weeks after seperation to contact TSP. I'll find out then. That's when TSP form-70 is submitted to tell TSP what to do with your account.

Most of the FERS stuff, why do I feel like the blind leading the blind?

Regards.................... .......................Spaf

Originally Posted by robo

I want to keep a balanced portfolio 50% G Fund and 50% in the market. I want the ability to make IFT's whenever I want.

Just a few more years to go! Thanks...

Yes, robo, you can do that and there is no restriction which funds you will be investing while receiving monthly payment. At the end of each year you have an option to decide how much you want to receive for next year.

Refer to early post in this thread by Walli1 http://www.tsptalk.com/mb/showthread...8287#post48287, he described the similar situation that you were asking.

Also, please refer to the link: http://www.govexec.com/dailyfed/0306/032406rp.htm for TSP withdrawal options.

I am planning to do the same in about 5 years.

Ocean

Spaf and Ocean,

Thanks!!!!

Remember, the money in TSP accounts has never been taxed, so any cash withdrawals will be subject to income tax in the year they are taken out.

There are no restrictions on moving between TSP funds while taking monthly payments. The monthly payment is withdrawn in percentage proportion from each fund you are invested in at the time of the monthly payment. That way your asset allocation is maintained. It’s the same principle that TSP uses when you repay a loan. You make a payment and its deposited in percentage proportion to each fund. For example, if you have $100,000 and have an asset allocation of 40% G ($40,000), 35% C ($35,000), 15% S ($15,000), and 10% I ($10,000), a 400 monthly payment is withdrawn as follows: from G 0.40X400 = $160; from C 0.35X400 = $140; from S 0.15x400 = $60; and from I 0.1X400 = $40.

Originally Posted by EWGuy

There are no restrictions on moving between TSP funds while taking monthly payments.

I agree. However that doesn't answer the question I asked that Robo is refering to. The scenario I described is this:
TSP only offers one type of life expectancy payment. However the IRS allows other types that allow you to apply a "reasonable interest rate" to your monthly payment. This results in a much higher payment. Since TSP doesn't offer this method, you would have to first roll your balance over into an IRA of some sort. Then take advantage of the other method. My question was in this scenario, are you restricted in where your money can be invested. Since you are being allowed to assume a rate of return, are you forced to try to earn that rate of return?

Dave
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I believe I have answered the question regarding any restrictions on where you park your money in TSP while taking monthly payments from your TSP account.

I did not realize you are considering a Rollover IRA, to get a larger monthly payments. You should ask the new custodian that question.

Originally Posted by EWGuy

I did not realize you are considering a Rollover IRA, to get a larger monthly payments. You should ask the new custodian that question.

I'm not. It was a hypothetical situation. I was explaining to someone how to get a larger life expectancy payment and the question was born from that.

Dave
<><

Originally Posted by EWGuy

I believe I have answered the question regarding any restrictions on where you park your money in TSP while taking monthly payments from your TSP account.

I did not realize you are considering a Rollover IRA, to get a larger monthly payments. You should ask the new custodian that question.

EwGuy,

Thanks for your answer. I mixed up a couple of idea's in my question. That happens when you work nights, I'm tired and out of it most of the time. It's taken a toll on my health. That's why I'm retiring soon. I average around only 4 to 5 hours a sleep a day, it sucks!

Thanks again! I will put 50% in G Fund and 50% I will use for Stock Market investing. Based on what you have told me I can continue to make ITF's whenever I want. I will make fewer and lower risk trades in my TSP account the next few years going into retirement.

I will not rollover my TSP account. The cost of TSP is cheap and I already have traditional IRA's and Roths to liquidate. The Roths are the sweet deal I think. As Enio pointed out about taxes on TSP, no such thing on Roths. I will max them out as long as I'm working. My wife will work 5 years longer than I plan on so that's around another 100K in 401k money and 25k in her Roth.
However, Uncle sam could change things, but for now I will plan on the rules not changing much.

Thanks to all others that answered this question.

Originally Posted by robo

EwGuy,

I will not rollover my TSP account. The cost of TSP is cheap and I already have traditional IRA's and Roths to liquidate.

Gotta agree with ya! My TSP account stays. It's not the best of funds, but it's better funds [Good..better..&..best]. I checked with a dozen or so investment companies and they all have good retirement plans. However, they can't beat the low TSP expenses. And, mutual funds have lost my trust. I had rather do it myself, besides it's fun! Instead of going with a traditional IRA or a Roth, I'm staying with TSP and my internet broker. I really like the ETF's, especially the ones controlled by iShares. I like the option of selling to cash or making a trade on an instant basis, without getting a letter from the fund manager accusing me of being a [bleep] trader. Like my small investment is going to ruin his billion dollar fund.

Once you read the TSP options on their form-70, you have a lot of things to choose from.

The TspTalk board is a second reason I opted to stay with TSP. With all this information. It beats a prospectus hands down (never could read one of them things, all their small print and stuff). I did have to get out the glasses to read EWGuy post # 6 in that small font, but at least I understood it.

Thanks guys for the retirement talk!............Regards............Spaf

PS: EW, I'm going to bump #6 up to a bigger font, iffn U don't mind....Good post there!

More Retirement Tibits

I opted for the monthly payment from TSP. Well today was my 28th day in retirement. Per the bank, they recieved a TSP direct deposit on the 24th. I had faxed TSP my TSP-70 on the 16th. The same day a lady from TSP called and told me they had recieved my seperation code from OPM.

I went over to TSP and checked my account. Sur-nuf they had reduced my shares proportionally.

Also, today the 28th day. I recieved my annual leave (+other) reinbursement via direct deposit from the finance agency.

Well thats the latest news from the retirement pod!

Regards, and be careful!.......... ...............Spaf