Tsp monthly withdrawal options at 57.5 yrs old

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10-11-2018, 09:26 PM
american42

Tsp monthly withdrawal options at 57.5 yrs old

I will retire from Federal service at 57.5 yrs of age. My plan was to supliment my income from my tsp account until I can start getting my federal retirement pay. Is this possible under current tsp withdrawal rules?
10-11-2018, 11:50 PM
Scout333

Re: Tsp monthly withdrawal options at 57.5 yrs old

Hello 42, check out your withdrawal options on tsp.gov. Since this is only a temporary problem you might want to try out some other options to cover your temporary shortfall till your civil service retirement is processed. i.e. save your annual leave and cash it in when you retire. Work an extra year and live on your retirement i.e. save the extra to live on until your retirement is processed. A lot of the withdrawal options are pretty much permanent. i.e. you may not want to be tied into a permanent election to solve a temporary problem? JMHO
Good luck in your retirement! I highly recommend it!
10-12-2018, 01:19 AM
DreamboatAnnie

Re: Tsp monthly withdrawal options at 57.5 yrs old

Quote:

Originally Posted by DreamboatAnnie

Hi, I recently attended World Investor Week 2018 put on by SEC and TSP. The attached pdf is the presentation given that describes TSP retirement withdrawal options and the options that will be available beginning in Fall 2019 as a result of legislation signed by Pres. Trump in Fall of 2017. This pdf has very good information on the new multiple withdrawal options that will be available. My understanding is that even those who have retired will also have these new options. They did get rid of the single lump sum and now can do many multiple things.

..sorry... must be too big.. will look for a link

ok here is link so you can see the Webinar presentation.... but quite honestly the PDF is better! :)

https://www.sec.gov/news/upcoming-ev...p-account-2018

PDF LINK: (This link to PDF is also embedded in the Webinar meeting URL above).
https://www.sec.gov/investor/your-ts...018-slides.pdf

HERE ARE MY PERSONAL NOTES (so you would want to confirm accuracy). I took them pretty quickly while listening to the Webinar presentation. I think it is BEST to read the pdf first and then if you want watch the webinar.

3 Forms will be consolidated to TSP-99 by late next year.
Under new rules, allows more Withdrawal (WD) options. Let’s you change your monthly payment options each year and will also allow quarterly and yearly WDs. Can do more than just one lump sum withdrawal.

11/17/2017 - NEW law enacted and must be implemented by TSP within 2-years—so that is Nov 2019. Provides more flexibility in withdrawing (WD) your funds.
Includes multiple age-based WDs for those 59-1/2 while in-service (i.e. still working). This will not stop you from being able to take a partial WD after you retire as is now the case, plus you get up to 4 Age-based WDs per year while in service (still working). All or any portion can be transferred to an IRA or eligible employer plan, if eligible and can continue to make contributions to the TSP.

Once retired, will be able to take one partial lump sum every 30 days, no lifetime limit, and can do this while receiving installment payments. All or a portion can be transferred to an IRA or eligible employer plan, if eligible.

New ability to select payments on quarterly and yearly basis (plus the monthly as is currently the case). Option to get a combination of (1) partial lump sum payout, (2) purchase an annuity and/or (3) get full lump sum while receiving installment payments – but not required to take everything out. New: option to start, stop or change installment payments at any time. Also, for Lump sum or Life Annuity, can use all or a portion of the account balance. So, can do all 3: do a lump sum (partial or full) and if you do a partial lump sum, you can also set up an annuity if you want plus some payout as installments that can be changed at any time.

FULL WD at retirement will NO LONGER BE REQUIRED. Currently, you must divide it up between single payment (full or partial lump sum), life annuity or monthly payments (of fixed amount or life expectancy). But under new law, you are no longer required to fully withdraw your TSP. You can elect installments and lump sum (full/partial) and Life annuity if you want, in basically any combination.

WD tax treatment. You will be able to select to WD from Roth balance only, traditional balance only, or mix. Under current law, the tax charge is pro-rata against your TSP balance traditional and Roth. Under new law, will be able to apply tax to traditional only, or Roth only or pro-rata from both.
New law gets rid of full WD requirement at age 70.5 when person is separated from gov. IRS Required Minimum Distribution (RMD) requirement at age 70.5 is going away. They will send you the RMD amount automatically. The RMD rules apply to each separate account and they use uniform lifetime table as long as there is money in the account. When you turn 70.5 must satisfy by April of year 2. May begin at 27.4 or 26.5%.

Early WD penalties – Exceptions to IRS Early Penalty - must be age 59.5, or 55 and retired, or 50 public safety employee.
TSP 775 AND 536 to help with payments from your account and RMD rules as far as taxes.
Go to TSP.gov - Many tools. Use calculators. Can now find your beneficiary information on line now.

hope this helps with your question.
10-12-2018, 08:31 AM
weatherweenie

Re: Tsp monthly withdrawal options at 57.5 yrs old

Have you looked into a 72t withdrawal?

Quote:

Originally Posted by american42

I will retire from Federal service at 57.5 yrs of age. My plan was to supliment my income from my tsp account until I can start getting my federal retirement pay. Is this possible under current tsp withdrawal rules?
10-12-2018, 10:14 AM
James48843

Re: Tsp monthly withdrawal options at 57.5 yrs old

Quote:

Originally Posted by american42

I will retire from Federal service at 57.5 yrs of age. My plan was to supliment my income from my tsp account until I can start getting my federal retirement pay. Is this possible under current tsp withdrawal rules?

Yes.

IF you qualify for a full, immediate retirement, such as a minimum retirement age plus number of years of service (56/30) AND ARE OVER AGE 55, then you can make a ONE TIME DECISION TO TAKE A PARTIAL WITHDRAWAL, or you can make a FULL WITHDRAWAL with monthly payments, or you can buy an annuity.

Read this: https://www.tsp.gov/PDF/formspubs/tspbk02.pdf

ANd this page:

*********Early Retirement

If you receive a TSP withdrawal payment before you reach age 59½, in addition to the regular income tax, you may have to pay an early withdrawal penalty tax equal to 10% of any taxable portion of the payment that is not transferred or rolled over.However, if you separate from service during or after the year you reach age 55 (or the year you reach age 50 if you are a public safety employee as defined by section 72(t)(10)(B)(ii) of the Internal Revenue Code), then the 10% early withdrawal penalty tax does not apply.

There are other circumstances in which the 10% early withdrawal penalty does not apply that are not associated with your age at retirement. For more information, read the TSP tax notice "Important Tax Information About Payments from Your TSP Account."https://www.tsp.gov/resources/images/icon_pdf_tiny.gif

*********************

If you are retiring with a full, regular immediate retirement, then you are eligible to begin withdrawing a monthly amount immediately.

Full eligibility for immediate retirement is one of the non-penalty clauses of the TSP rules allowing with withdrawal to start before age 59 1/2 without a tax penalty.
However, you MAY want to consider waiting until September, 2019, when many more options for adjusting the amount or when the withdrawal will become effective.
We saw a flyer from the TSP about those new options coming in September 2019.

Read more on your options when retiring, here:
https://www.tsp.gov/LifeEvents/caree...etirement.html

Good luck!
10-15-2018, 12:35 PM
american42

Re: Tsp monthly withdrawal options at 57.5 yrs old

Thank you for your response. Was helpful. My understanding is the Federal Retirement won't kick in until im 62yrs old. Unless I have missunderstood somewhere in the retirement class. So was planning on using my TSP to supliment for 4.5 yrs. So its not so short term but still helpful to know it can be started adn stopped with the new rules. Thanks for your post.
10-15-2018, 01:06 PM
american42

Re: Tsp monthly withdrawal options at 57.5 yrs old

Quote:

Originally Posted by DreamboatAnnie

hope this helps with your question.

Wow Thank you for all the replys and great places to find the infromation. DreamboatAnnie I will definately read through the PDF version for more insight. Thank you for takign the time to share the links and all the info. I also want to thank Scout333, James48843, weatherweenie (I have not checked 72t withdrawl; but will now thx), for their comments as well. I'm glad they have changed the rules to allow more flexability with WD options.

Unfortunitly I still have 14.5 more years till I can retire, :worried: by then I will have 33.5 yrs of federal service. But this is the point where I can keep my insurance plan. However I was told I can't start drawing on my federal retirement until I am 62. So that is where my original questions stems from. I was planning on suplimenting my income with TSP withdrawls for 4.5yrs. I will continue to read through all the information you shared via links or places to look and should have a better grasp on my options.

this is the first post I have started and am pleasantly suprised on how thoughtful you responses were. Seems like a great site Thank you.