Desperate for Help

[scaredstiff]

Can any body help me Please, I am getting desperate. I went to a financial advisor to buy an annuity with part of my TSP account. But when the company took the money out of my account they sent in a full withdrawl form and not partial withdrawl form to TSP which caused my account to be closed. When I called TSP they said there was no way to reopen my account and send money back. Do you know if I have any recourse and how can I send money back to TSP and have the account reopened. Please respond to this ASAP if you know of a way.

 

[pmaloney]

I don't know but I would question the company and why they took all your money out. Then if you can't get back into TSP, I would take the rest or cancel the annuity and take everything and go to a larger company like Vanguard and invest in a retirement account. You can invest in S&P and Total Market like the C and S Fund and they have many other options.

There are people on this site that can give you better advise and say they make a lot more money than they did in the TSP.

Good luck and God Bless! :smile:

 

[Mcqlives]

Ouch! First thought is to be really, really pissed at your financial advisor. Seriously, have you sought legal counsel? If you have documentation that they were only supposed to take a portion of your account I would say you have grounds. I don't know how you can get your money back into TSP short of a court order. I am not 100% on this so please fact check.
Second is to get away from that company as quickly as you can. There are several good companies out there (Like Vanguard and Charles Schwab) that can get you in good growth funds.

I do have one other possible resource for you and will PM it to you since this is Tom's website;-)

 

[evilanne]

Wow, that is tough lesson. Do you have a copy of what they actually submitted? Did you actually sign the form? If so, I'm not sure there is anything you can do. I'm not sure if financial advisor was incompetent or did it intentionally. The forms are a bit confusing, especially if they are not used to dealing with federal employees or TSP. I think you would be hard pressed to prove intent, but it would not hurt to get legal advice. When you call TSP is there any way to elevate the issue? I know they are a stickler for the rules but it never hurts to try.

If you go through government to get an annuity, you do use TSP-70 Full Withdrawal but that has a percentage for amount. For transferring outside to purchase an annuity, they would have had to input 100% under the single payment option in order for them to get your entire balance. You should have entered monthly payment option for amount that was to remain in TSP and how it was to be distributed.
View attachment 42318
TSP-77 Partial Withdrawal does not address annuities except the spouse's waiver that permits the withdrawal.

I'm with Mcqlives in taking your business elsewhere once this issue is resolved.

 

[scaredstiff]

Yes this was the form and they put in 100% in the box but to the left of the box they wrote in traditional money only not Roth balance. Unfortunately the Tsp staff sent the traditional balance to the annuity company and the Roth balance was mailed to me minus tax penalty. This also caused full tsp account to be closed.

 

[evilanne]

How long ago did this happen? You have 60 days to open up outside Roth to put money in, if you are able to come up with the 10% withholding you would get it all back when you file taxes. If you can't make up the difference, you would at least reduce the amount of the penalty and still have a tax deferred account.

 

[Boghie]

Yes this was the form and they put in 100% in the box but to the left of the box they wrote in traditional money only not Roth balance. Unfortunately the Tsp staff sent the traditional balance to the annuity company and the Roth balance was mailed to me minus tax penalty. This also caused full tsp account to be closed.

It was your Traditional TSP withdraw that triggered the tax penalty - not the Roth TSP withdraw. Are you under the minimum withdraw age - 59 1/2?

You were going to pay the tax on the Traditional TSP withdraw regardless. However, withdrawing it all in one year makes your taxable income higher in that year. Consider your traditional accounts the same as work income. They were tax advantaged as you saved in them, they are taxed as you withdraw from them, and you are penalized if you withdraw from them prior to retirement age.

As far as redress... I looked at the actual form and there is a 'TSP Account Number' field. I don't have a Roth TSP account, but do both the Traditional and Roth accounts have the same number? If not, and if you entered the Traditional TSP account number, than TSP should be able to quickly reverse the Roth transaction. If they don't have different numbers than... Uuuuggghhhh, did you or the 'adviser' read the instructions? I don't mean to be rude, but the instructions are clearish - and the issue may not be the percentage or scribble mark to the left. Nobody cares are scribble marks in the margin. From the instructions for filling out the form:

• ✓ To request a partial withdrawal of your account and leave the balance of your account with the TSP, complete Form TSP-77, Request for Partial Withdrawal When Separated. Complete this form (TSP-70) only if you want to initiate monthly payments, purchase a life annuity, receive a final lump sum payment, or a combination of these from your entire vested TSP account balance.
• ✓ Pages 1 and 2 (Sections I, IV, and VII) are required for all participants. You must sign and date the form, and your signature must be notarized.
• ✓ If you are married, you must complete Section II or III depending on your retirement coverage. If you are a married FERS or uniformed services participant, your spouse must also sign the form, and the signature must be notarized.
• ✓ If you have a traditional (non-Roth) balance and you would like to transfer all or a part of the traditional (non-Roth) portion of your withdrawal, you must check the box in Section V. You and the IRA trustee or plan administrator must complete Page 4. You must include the completed page with your withdrawal request package.
• ✓ If you have a Roth balance and you would like to transfer all or a part of the Roth portion of your withdrawal, you must check the box in Section V. You and the IRA trustee or plan administrator must complete Page 5. You must include the completed page with your withdrawal request package. The taxable portion of the withdrawal from the Roth balance will be transferred first. Nontaxable money will be transferred only if the taxable portion of the withdrawal does not satisfy the participant’s transfer election.
• Note: If you would like to transfer all or a part of both the traditional and the Roth portions of your withdrawal, you must check the box in Section V. You and the IRA trustee or plan administrator must complete Page 4 and Page 5, even if the transfer is to the same financial institution. You must include the completed pages with your withdrawal request package.

Your instructions to TSP regarding the Roth withdraw are on page 5. Apparently, they count the pages as form fill pages. The instructions for each page are on the back side. Here is Page 5:



Did you or your 'adviser' fill out Page 5 (Sections XI through XII) and check Section V? If not, or if you stated 0% for the Roth than you have redress that should be taken care of quickly.

If all the stuff is filled out to transfer the Traditional and Roth portions of the account and you signed it than I don't think you can move money back into TSP.

However, the Roth balance could be reinvested without penalty or tax in a self directed Roth IRA in some of the large brokerage or fund companies noted above. You can pick from a large assortment of assets classes and pick funds and/or ETFs that have minimal fees. That part is straight forward.

 

[Boghie]

Wow,

The form I looked up came into effect this year (2018), so obviously OP did not use that form. It is difficult to drag out the earlier versions of the form, but they seem to not have included the separate instructions and pages for the different types of TSP savings options (Traditional/Roth). Can anyone verify? This chap may have quick redress if TSP admin kludged the request by misreading the form, but otherwise it seems as if they are rather recalcitrant...

My guess is that ScaredStiff's experience is similar to example 2 since he/she seems to have a tax issue:

In another case, an adviser used the wrong form. In trying to execute a rollover of part of the client’s TSP account (leaving the rest in the TSP), the adviser used the TSP-70 (full withdrawal) rather than the TSP-77 (partial withdrawal). When the TSP processed the form, it rolled over the requested amount and cashed out the remainder of the client’s account in a single payment directly to the client.

Oh my God, what a mess.

Read this from BoggleHeads...​

Many TSP participants have expressed dissatisfaction that employer retirement plans like the Roth TSP and Roth 401(k) require RMD from the Roth portion. One way to avoid this is to transfer the assets out of the Roth TSP and into a Roth IRA, so that RMD will no longer be required.

As noted elsewhere, however, a partial withdrawal and RMD comes out of the TSP participant's traditional and Roth balances pro rata. For example, if a TSP participant has $100,000 total, with $25,000 in Roth TSP and $75,000 in Traditional TSP, and requests a $40,000 partial withdrawal, then the withdrawal will be $10,000 from the Roth TSP and $30,000 from the Traditional TSP.

If the participant would like to do a partial withdraw for only the Roth TSP portion, that is not allowed under current rules, but there is a workaround that achieves virtually the same.

It looks as if using one form to break out partial withdraws is a bit to complex for the average TSP clerk - especially if the breakout was 'documented' not in the form but in a pencil whipped margin comment. Basically. Section II is used to inform TSP to withdraw a specified amount of casholla. If you fill that out it appears that the process will just split the dollar amount proportionally (pro rata) regardless of the rest of the form. I don't know if you can leave that blank and direct individualized withdraws via Pages 4 (Transfer - Traditional) and 5 (Transfer - Roth). It does look like it, but then again...

This is too much for me. I would talk to a very competent adviser - and maybe even one with an associated legal team.

No impact, no idea

 

[evilanne]

OP hasn't posted since October...way past time that anything could be done and no recent updates, so we don't know what they actually did

Using TSP Form 77 (Partial Withdrawal) rather than TSP Form 70 would have prevented the account from being closed but funds would have been a mix of Roth & Traditional sent to the annuity:dunno: Hopefully TSP Modernization Act when implemented may prevent situations like this from happening, in the meantime, it is better to make sure you understand the forms/process and ask plenty of questions prior to submitting them to TSP.