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Thread: TSP avg. life expectancy 115?

  1. #1

    Default TSP avg. life expectancy 115?

    Someone posted this on our Facebook page...

    found out today that TSP bases withdrawals before age 62 on "average life expectancy". My actual ALE is 78. Most insurance companies/investment firms use 85. TSP told me they figure an AVERAGE life expectancy as being 115 YEARS OLD!! What a crock! We need to ban together to force a change!
    Does anyone have any information on this strange life expectancy figure?

    Thanks!


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  3. #2

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    Default Re: TSP avg. life expectancy 115?

    Quote Originally Posted by tsptalk View Post
    Someone posted this on our Facebook page...



    Does anyone have any information on this strange life expectancy figure?

    Thanks!
    I have NO IDEA, but the only thing I can think of where that may play a role, would be in determining the mandatory payout, if you don't start taking money out by the time you turn 70 1/2 years old. Isn't that when the mandatory minimum distribution must be made? And, if they are basing life expectancy at 115, that sure sounds like they would not require very much to be distributed at the time.

    Here is a discussion of the "REQUIRED MINIMUM DISTRIBUTIONS" from the TSP's website. They say they COULD use the IRS age tables, but that is only one option.

    For a discussion of the Age 115 life expectancy table issue, see booklet number TSP-776 found on the last page of the link here: https://www.tsp.gov/PlanParticipatio...nts/rmdbp.html


    Enjoy. Here is the actual notice/booklet: TSP tax notice "Tax Information About TSP Withdrawals and Required Minimum Distributions for Beneficiary Participants."

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  5. #3

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    Default Re: TSP avg. life expectancy 115?

    Here is that table from the TSP-776 booklet.

    115 table.jpg

    And if you read this- it looks like they are requiring you to take out FAR LESS than if they were using a 78 year life expectancy, or an 85 year life expectancy. I don't think this is a bad thing at all. If you don't need the money- why make you take it out earlier? Leave it in to cook, and let your survivors have to deal with what to do with the extra money.

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  7. #4

    Default Re: TSP avg. life expectancy 115?

    Quote Originally Posted by tsptalk View Post
    Someone posted this on our Facebook page...



    Does anyone have any information on this strange life expectancy figure?

    Thanks!
    No idea where they get their info - I retired at 56 and used age of 85 -- used a 6% per year and took out a montly amount that would deplete when I was 85

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  9. #5

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    Default Re: TSP avg. life expectancy 115?

    Just a heads up... Although TSP states that the "Required Minimum Distributions", must begin by April, of the year after you turn 70.5 years old, you should really start taking in out when you turn 70. Otherwise, TSP will disburse one year's worth of RMD in April, and another year's worth of RMD in December. Also, I'm fairly certain that TSP does not think the average life expectancy is 115 years. The chart is strictly a guide as to what the "minimum" amount is that must be withdrawn from your TSP balance. Someone, who is 70, has 27.4 years to withdraw their money. Someone, who is 115 (are there many of those around?), has 1.9 years to withdraw their balance.

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  11. Default Re: TSP avg. life expectancy 115?

    Quote Originally Posted by tsptalk View Post
    Someone posted this on our Facebook page...



    Does anyone have any information on this strange life expectancy figure?

    Thanks!
    Hey guys, wanted to clarify this as I am the one who contacted him on Facebook. I am 50 and plan on retiring at 55. I separated from the PO about 2 1/2 years ago. I called TSP because I wanted to see if it was possible to start taking withdraws WITHOUT PENALTY at 55. They told me (more than once) that I can as long as I take payments based on my "average life expectancy". Now, the ALE for a male my age is 78 but I knew that insurance companies and mutual funds use an older age so they dont have to pay out as much...in this case that is usually 85. However the TSP representative told me (and I asked multiple times for clarification) that THEY consider ALE to be 115. I asked how that is possible since almost NO ONE lives that old and they lady sort of apologized like she knew I was right and said "that is just how our computers are set up to figure it." Now at 62, I can make changes however I wanted some income between 55 and 62 so it would be easier to "make ends meet" and not have to rely 100% on savings.

    One of you mentioned that they didnt see a problem with 115 as it would leave money for your family however I dont have any family and it is MY money, so if I want to spend it before I die, that should be my (and your) choice, not TSP's choice to make. I just dont think it's right to use an age that less than .1% of people will live to see as the "AVERAGE" life expectancy.

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  13. #7

    Default Re: TSP avg. life expectancy 115?

    Fix, the information you received doesn't make sense. I suggest you call back and speak to another representative. If necessary ask where they got the information. Brochure number, etc. Keep trying until you get an answer that makes sense. Skill levels vary among TSP reps as in most call in centers. LOL

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  15. #8

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    Default Re: TSP avg. life expectancy 115?

    Quote Originally Posted by fixfireleo View Post
    Hey guys, wanted to clarify this as I am the one who contacted him on Facebook. I am 50 and plan on retiring at 55. I separated from the PO about 2 1/2 years ago. I called TSP because I wanted to see if it was possible to start taking withdraws WITHOUT PENALTY at 55. They told me (more than once) that I can as long as I take payments based on my "average life expectancy". Now, the ALE for a male my age is 78 but I knew that insurance companies and mutual funds use an older age so they dont have to pay out as much...in this case that is usually 85. However the TSP representative told me (and I asked multiple times for clarification) that THEY consider ALE to be 115. I asked how that is possible since almost NO ONE lives that old and they lady sort of apologized like she knew I was right and said "that is just how our computers are set up to figure it." Now at 62, I can make changes however I wanted some income between 55 and 62 so it would be easier to "make ends meet" and not have to rely 100% on savings.

    One of you mentioned that they didnt see a problem with 115 as it would leave money for your family however I dont have any family and it is MY money, so if I want to spend it before I die, that should be my (and your) choice, not TSP's choice to make. I just dont think it's right to use an age that less than .1% of people will live to see as the "AVERAGE" life expectancy.

    Hello Fixfireleo, James posted the below information on another thread. Great information but the first part on lump sum is changed/changing due to new rules that should be in effect thus month or the next....check tsp.gov. You can change the monthly payouts and take more lump sums,...but the tax penalty information is not changed. There should be no early withdrawal penalty if you are at the minimum required age for your period if service. Hope this helps some. Best wishes DBAnnie

    Quote Originally Posted by James48843 View Post
    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."



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


    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!
    CURRENT: 11-25-19= 25G, 25F, 25C, 25-I //PRIOR: 10/24/19 = G100% /10/9/19=10F, 20-I, 70G // 10/4/19=I-25, C15, S10 & G10-F40// Chart Links=Page 215, #2575 & 2576

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  17. #9

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    Default Re: TSP avg. life expectancy 115?

    I think you're heading down the path of 72T IRS rule for withdrawal. Plus, I believe the age is calculated in the IRS pub, not TSP. Warning, I'm retired now for almost 4 years. So I've been out of the the retirement conversations for quite a while. 115 years old makes no sense!

    Jeff
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    Fear is the greatest buy signal ever seen in the stock markets - Birchtree


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  19. Default Re: TSP avg. life expectancy 115?

    Quote Originally Posted by DreamboatAnnie View Post
    Hello Fixfireleo, James posted the below information on another thread. Great information but the first part on lump sum is changed/changing due to new rules that should be in effect thus month or the next....check tsp.gov. You can change the monthly payouts and take more lump sums,...but the tax penalty information is not changed. There should be no early withdrawal penalty if you are at the minimum required age for your period if service. Hope this helps some. Best wishes DBAnnie
    You gave me good advice to call TSP again and speak to someone else. A lot of this is sort of legal speak. I quit the PO at 47 or 48. I dont intend to withdraw until age 55.

    "paid after you separate from service during or after theyear you reach age 55"

    I called TSP again and this means you cant quit BEFORE age 55 like I did. If you do, your minimum age is 59 1/2 to not pay penalties, EVEN if you delay withdraws until age 55.

    Then it says:

    "paid as substantially equal payments over your lifeexpectancy"

    They verified that the ALE charts are issued by IRS and these figures are based on ALE being 115. At age 62, you have the flexibility to change your withdraws to what you want but if you want to withdraw early, like I do, they are only going to pay you based on ALE of 115.

    So in the end, TSP is saying it is the IRS that is claiming you are going to live to 115 and they just have to follow those guidelines. It's still crap. If ALE is 75, MAYBE I can see using a figure of 95 or even 100 but not 115.

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  21. #11

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    Default Re: TSP avg. life expectancy 115?




    fixfirleo,

    I'm planning on living to 115 based on the IRS tables By 115 your money will be pretty much depleted if you use the RMDs (you can always withdraw more) and you have not already depleted it. At age 115+ you have to withdraw half of it each year. It was designed to be expended during a person's lifetime--I think they picked a number that they didn't think anyone would live beyond--more like an actuarial table.

    You can start taking life expectancy payments without penalty now if you use the life expectancy tables. Between age 50-60, it comes out to about 3-4% of your year end balance but you will have to continue with this method for 5 years or until you reach 59.5 (which ever is later). IRS rule is 72t - see https://wealthpilgrim.com/early-ira-...ule-explained/ & https://www.irs.gov/pub/irs-pdf/p590b.pdf If you chose this method, DON'T DEVIATE from the rules or penalties will kick in. See Appendix B. Life Expectancy Tables (Single Life Expectancy) in Pub 590b - this is what is used for life expectancy before RMDs kick in.

    The best way to see how this works is to use https://www.tsp.gov/PlanningTools/Ca...alculator.html with your own information/assumptions. You will notice a big shift in the Table/Graph when RMDs kick in at 70.5.

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  23. Default Re: TSP avg. life expectancy 115?

    Quote Originally Posted by evilanne View Post



    fixfirleo,

    I'm planning on living to 115 based on the IRS tables By 115 your money will be pretty much depleted if you use the RMDs (you can always withdraw more) and you have not already depleted it. At age 115+ you have to withdraw half of it each year. It was designed to be expended during a person's lifetime--I think they picked a number that they didn't think anyone would live beyond--more like an actuarial table.

    You can start taking life expectancy payments without penalty now if you use the life expectancy tables. Between age 50-60, it comes out to about 3-4% of your year end balance but you will have to continue with this method for 5 years or until you reach 59.5 (which ever is later). IRS rule is 72t - see https://wealthpilgrim.com/early-ira-...ule-explained/ & https://www.irs.gov/pub/irs-pdf/p590b.pdf If you chose this method, DON'T DEVIATE from the rules or penalties will kick in. See Appendix B. Life Expectancy Tables (Single Life Expectancy) in Pub 590b - this is what is used for life expectancy before RMDs kick in.

    The best way to see how this works is to use https://www.tsp.gov/PlanningTools/Ca...alculator.html with your own information/assumptions. You will notice a big shift in the Table/Graph when RMDs kick in at 70.5.
    I think this whole discussion would have been unnecessary if they called it "Maximum Life Expectancy" instead of "Average Life Expectancy".

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