Can I direct transfer 1/2 TSP to IRA later direct transfer 1/2 again

[Floorplan]

I am retiring end of Dec 2006 as a FERS with a 50/20 VERA Early Out.

I am frustrated trying to understand the withdrawal rules for TSP. The TSP SEPP payments sounded really good until I realized that I can only use the MRD IRS method for 8K instead of the IRS Amortization method for 20K. I was also concerned that it looked like the rules indicated I would need to continue the fixed TSP SEPP payments for 10 years or be IRS 10% penalized. There are plenty of really great and flexiable ways to withdraw from TSP, but they all seem to only be good for retirees who are already 591/2 and don't need to be concerned about IRS early withdrawal penalty rules.

So here is what I am trying to consider to make it all work for me. Can I choose to direct transfer 1/2 of my TSP to my regular IRA so that I can SEPP it for the 20K for less then 10 years penalty free. And then months or years later if I find that I need/want to SEPP more can I do another direct transfer to IRA of the remaining 1/2 (or less) of my TSP so that I can also SEPP that money IRS penalty free for less then 10 years.

Any help with how to use the SEPP rules when under 591/2 with the unique TSP rules is appreciated.

Thanks

 

[clester]

You only have the one option under TSP. You can transfer all or part to an IRA and use the 72t amoritization method.

A couple of things to consider. The TSP SEPP is the same as minimum distribution method of a 72t (IRA rule for SEPP's). It starts out lower, but increases yearly because of the way they calculate it. So its sort of like a COLA. The 72t rule is a lot higher at the start, but is set in stone until age 59 1/2. 72t allows a one time change to the minimum method (In case you balance is in danger of running out).
So the question becomes, can you afford the minimum method now? Do you want your money now or later?

I have the same question. I will also take a ATC early out 25 years at any age. I will be 49 1/2. If I use the amoritization method, inflation will eat away at my buying power some but my take home will be the same the first year. Your FERS ret. has a cola, but not the ss supplement.
I could go on and on.

 

[clester]

Also www.72t.net has some good info.

 

[Floorplan]

Hi all

Thanks much for your 72T info and help!! The part I am still not clear about is the TSP withdrawal part of this strategy. Can I, without tax or 10% penalty and without bumping into some TSP/IRS rule that says I can't, direct transfer 1/2 my TSP right after I retire and then months or years later(proabably will be years) direct transfer more TSP to the IRA without taxes or penalty. That is the detail that is stumping me and will hurt me if I do it wrong! I have looked high and low and can't find anything in the TSP or IRS rules that gives a clear answer to this.

 

[SkyPilot]

Floorplan,

With something that is this important, you may want to consider hiring a CPA or Tax attorney for some very specific counsel. May cost you a couple hundred bucks, but sound advice at this point would be well worth the investment and a very prudent course.

 

[Floorplan]

Thanks Skypilot,

Unfortuantely I am trying that but the CPA's I have called to inquire if they are familiar with the specific rules of TSP withdrawals know little about the TSP. And don't seem to want to find out. Which is why I am here. I was hoping that someone has already taken their money out in 2-3 seperate withdrawals so they know it can be done. Or already determined that they can't and can share where they found it with the rest of us. Hopefully we can find the answer and post it here so the next person doesn't need to struggle with this but can just come here to find out!

Thanks again Skypilot.

 

[clester]

www.72t.net has good info with people discussing unusual circumstance like the one you have. My opinion is that you could have a 72t now and when its time transfer the rest to another IRA and start another 72t. You just can't change the first one. So you would have 2 IRA accounts. Just my 2c worth.

 

[clester]

That would be great. I'd love to leave mine in the TSP. Do you have a link to the site?