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Thread: In service withdrawal

  1. Default In service withdrawal

    Hi,
    I am new to this site and will be retiring at the end of September. I am looking to buy a new primary residence while keeping the home I have lived in for the past 24 years. I know I can take an in service withdrawal from my TSP account at age 59 1/2 which will be on June 30 of this year. Does anyone know if I can roll that withdrawal into a self directed IRA and then use that IRA to pay the down on the new primary residence? If so, does that eliminate the tax penalty that I would otherwise have to pay?
    Thanks for the help,
    Mike


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  3. #2

    Join Date
    Oct 2010
    Location
    Aiea, Hawaii
    Posts
    1,038

    Default Re: In service withdrawal

    Well.......Welcome to the boards!! Better late than never.

    Congrats on your upcoming retirement. I will be following you out in December!

    There have been several posts about the new TSP withdrawal rules (mine for example) but it doesn’t look like they will be out till late 2019. So that doesn’t help you, except to know that they are coming.

    You can take out 1 in-service withdrawal, which is penalty free after age 59.5. For now that will leave you with 1 final withdrawal after you retire (until the aforementioned new rules get implemented). But if it was Traditional TSP (as opposed to Roth TSP), you WILL have to pay taxes at your 2018 rate. You CAN roll it into a self-directed IRA and avoid the tax hit, until you take it out of the self directed IRA to use as your down payment.

    See. https://www.tsp.gov/PDF/formspubs/tspfs10.pdf
    There are 10 types of people in the world. Those who know binary, and those that don't!!
    Retired on December 31, 2018!!

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  5. #3

    Join Date
    Apr 2008
    Location
    Cleveland, Ohio
    Posts
    9,598

    Default Re: In service withdrawal

    SluggerMike,

    Congratulations on your upcoming retirement. Even though you are retiring you can still ask questions and participate here if you would like. There are a few of us here that are retired and continue to help out our fellow Military and Federal members.
    May the force be with us.

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  7. #4

    Join Date
    Jun 2004
    Location
    Boiled Peanut, Georgia, USA
    Posts
    57,509

    Default Re: In service withdrawal

    Welcome to the Forum SluggerMike!
    06/24/2019
    CRUDE Oil
    $57.90 +$.47

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  9. #5

    Join Date
    Oct 2010
    Location
    Aiea, Hawaii
    Posts
    1,038

    Default Re: In service withdrawal

    So SluggerMike, did any of this help? What did you decide to do?

    Recommend you establish your Account Talk Thread, as suggested by the info for new members. That way, all your postings will be under your thread.

    Hope this helps!
    There are 10 types of people in the world. Those who know binary, and those that don't!!
    Retired on December 31, 2018!!

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  11. #6

    Default Re: In service withdrawal

    Welcome to TSPTalk SluggerMike! Lots of options available. To defer the tax cost you could select a monthly withdrawal amount to cover all or part of your mortgage payment and taxes. i.e. Withdrawal elected of $ 1200 month to cover approx. $ 200 and $ 1000 towards the mortgage. Spreads the tax over a much longer period AND can lower tax rate paid if taxes in retirement are at a lower rate. Lump sum withdrawal is usually not the best tax option. Good luck!

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