Elgallo's Retirement story

[Show-me]

You will have to pay taxes as if it is ordinary income, but TSP's answer is clear as mud.

Federal Income Taxes

TSP withdrawal payments are subject to Federal income tax. However, different tax rules apply to the different withdrawal options. Also, different tax rules may apply to Federal civilian employees and to members of the uniformed services. You may also be subject to state taxes.

Early Withdrawal Penalty Tax

Depending on your age when you leave Federal service as well as your withdrawal option and its timing, you may be subject to the IRS 10% early withdrawal penalty tax.

Tax-Deferred Withdrawals

Keep in mind that some payments are eligible to be transferred to a traditional IRA or other eligible employer plan, thereby retaining their tax-deferred status. You can also transfer some payments to a Roth IRA but you will be liable for the taxes on the transfer for the year in which it was made.

 

[clester]

Re: Bquat - have a question again about your monthly withdrawl

so..............I did speak to TSP customer service about these monthly payments and I will be 56 when I possibly retire. I am still real not clear on this, Bquat do you still have to pay 20% federal taxes on TSP monthly payments because of being counted as income?

Everyone is telling me not to touch TSP money if possible, but in my case I need the money now and not necessarily as much in my sixties as I have a daughter who is a junior in high school. Our rental properties will be paid off in a few years also which will be additional income.

It is really scary retiring, but still waiting on the FERS supplement elimination decision. I can still make a little money when I retire but there is no way in heck I will commit to having to show up to the same place everyday, I've done my time answering to the layer of supervisors, my husband who works in private industry still laughs the government still calls them supervisors..........this is the 21st for gods sake!!!!!!!!!!

bj

Barbara,
It's regular income. So, it's taxed just like salary.

 

[Bquat]

Re: Bquat - have a question again about your monthly withdrawl

so..............I did speak to TSP customer service about these monthly payments and I will be 56 when I possibly retire. I am still real not clear on this, Bquat do you still have to pay 20% federal taxes on TSP monthly payments because of being counted as income?

Everyone is telling me not to touch TSP money if possible, but in my case I need the money now and not necessarily as much in my sixties as I have a daughter who is a junior in high school. Our rental properties will be paid off in a few years also which will be additional income.

It is really scary retiring, but still waiting on the FERS supplement elimination decision. I can still make a little money when I retire but there is no way in heck I will commit to having to show up to the same place everyday, I've done my time answering to the layer of supervisors, my husband who works in private industry still laughs the government still calls them supervisors..........this is the 21st for gods sake!!!!!!!!!!

bj

I pay less that 20 because of lower tax bracket. I you get another job, remember that the FERs (Social Security offset) suppliment has the same rules as SS on earned income. If the new job pays more then the mininum income set up by SS, you can lose $1.00 for every $2.00 earned. In other words you may want to work part time because youwill be working for 1/2 pay after so much income. Do odd jobs or handyman cash jobs. I don't work. I have had my mother in law livng with us for 5 years and she helps with living expenses. Just recently she is bed ridden and I am so glade I retired and can help her. My early retirement was because of her health issues and her help with living expenses.
PS you pay taxes on FERs retirement and the TSP wthdrawls but they don't count as earned income. Thanks for that at least.

 

[Elgallo]

Re: Bquat - have a question again about your monthly withdrawl

Received my second check on 1 March with an amount about $200 more than the month before. OPM sent me a letter prior informing me of the increase, but offered no explination as to why.

I have not solved my problem about establishing my CA State Tax witholding on the OPM service website, so I will apeal to the borard once again and ask if anyone could provide me with the secret to doing that?

 

[clester]

Re: Bquat - have a question again about your monthly withdrawl

Received my second check on 1 March with an amount about $200 more than the month before. OPM sent me a letter prior informing me of the increase, but offered no explination as to why.

I have not solved my problem about establishing my CA State Tax witholding on the OPM service website, so I will apeal to the borard once again and ask if anyone could provide me with the secret to doing that?

When I sign in, one of the links on left where your annuity statement link is, there is a link to adjust state tax amount. You can also adjust fed tax withholding.

 

[A2Z1112]

I compared my OPM page with a retiree's OPM page. He retired 8/31/11 and was adjudicated 12/31/2011. On the left side of his page under annuity statement there is a link which allows for State tax withholding. It appears we the newly retired have not been given this link thus far. Don't know for sure, but it seems we will be provided this link once we get closer to OPM finalizing our annuity. Keep checking your OPM page!!! Hope this helps!

 

[A2Z1112]

Also, with my March interim pay I received additional money. They withheld 15% for Fed tax vs 20% the first interim check. I also received the OPM notice that referred to an adjustment without giving an explanation. But if you crunch the numbers you will see it was a fed tax adjustment.

 

[Elgallo]

I compared my OPM page with a retiree's OPM page. He retired 8/31/11 and was adjudicated 12/31/2011. On the left side of his page under annuity statement there is a link which allows for State tax withholding. It appears we the newly retired have not been given this link thus far. Don't know for sure, but it seems we will be provided this link once we get closer to OPM finalizing our annuity. Keep checking your OPM page!!! Hope this helps!

More inane Govt/OPM BS I say. They tell you that it can be done, but don't qualify the circumstances in which you can and leave you hanging.

Why does or should it at all have anything to do with the ultimate adjudacation of my and others retirement! They are paying us NOW for gods sake so let us setup our proper state withholding. Or better yet WTF is it this way in the first place and why couldn't our state witholding just continue on after we retire. Oh yeh that would make sense!

 

[nnuut]

When I retired in Jan. 2010 we calculated and submitted our desired State Tax withholding along with our retirement application.

 

[nasa1974]

I submitted the federal W4 with my retirement papers but I'm told that the state won't be until after I get the final stuff from OPM.

 

[nnuut]

That is probably what happened with me, I do know one thing, it's SLOW!

 

[nasa1974]

Re: Bquat - have a question again about your monthly withdrawl

Not looking forward to paying city taxes.

 

[Elgallo]

Re: Bquat - have a question again about your monthly withdrawl

I'm just trying to avoid quarterly taxes and any penelties associated with being underwitheld come the end of the year. This may not be possible, avoiding quarterlys, that is.

We met with our Fedelity rep today and began the process of liberating my funds from the grasp of the gubmint. I had to wait until I received my notification of the taxable distribution of a small unpaid balance of a TSP loan I had outstanding at the time of my retirement before I could do this.

So things are movin right along.........

 

[nasa1974]

Re: Bquat - have a question again about your monthly withdrawl

So you are planning on moving your TSP funds out and into a non-government 401K? Advantage/disadvantage?

 

[Elgallo]

Re: Bquat - have a question again about your monthly withdrawl

So you are planning on moving your TSP funds out and into a non-government 401K? Advantage/disadvantage?

Yep, and I have begun the transfer process and hopfully it will be completed reasonably quickly. Afterall the gubmints involved, and I wouldn't want to suffer any delay due to the amount of money involved which is major.

The advantages are many as I see it.

1. Immediate access to my funds. No more of that, only way ya can do it, once a year adjustment of your draw, BS. If I need more I pick up the phone.

2. Many more investment choices. I currently use a news letter which concentrates soley on Fidelity funds and I model one of their 4 varing risk portfolios for my wifes Fidelity IRA and have been for quite some time and she is doing better than I am at the moment! I will most likely do the same with some or all of my IRA also.

3. Access to free financial advice from my Fidelity rep.

4. And lastly UNLIMITED trades per month.

They also have an interesting seperate annunity program that my wife may participate in.

You give them a balance say of $100K (or any amt), and if you are under 65 they pay you 4% for life if you begin to draw. If you are over 65 it's 5% for life. So the 100K would give you $500 per month for life beginning at 65.

The interesting aspect of this program is that on each anniversery you have the possibility of recieving an increase in the yearly amount. But in NO INSTANCE will you ever receive less than $500 for the rest of your life. It all depends on how Fidelity managed your money the year prior. If the market goes up so does your yearly amount, but you will always be guarenteed a 5% RETURN FOR LIFE.

The possibility of the annual increase is brought about by the fact that the 100K is being professionaly managed for you. There are yearly managment fees of appx 1 - 1.5 % depending on whether I desire rights of survivorship if she pre deceases me. If we elect that, the $500 will continue being paid to me even if Fidelity "lost" all of the 100k.

 

[nasa1974]

Re: Bquat - have a question again about your monthly withdrawl

Yep, and I have begun the transfer process and hopfully it will be completed reasonably quickly. Afterall the gubmints involved, and I wouldn't want to suffer any delay due to the amount of money involved which is major.

The advantages are many as I see it.

1. Immediate access to my funds. No more of that, only way ya can do it, once a year adjustment of your draw, BS. If I need more I pick up the phone.

2. Many more investment choices. I currently use a news letter which concentrates soley on Fidelity funds and I model one of their 4 varing risk portfolios for my wifes Fidelity IRA and have been for quite some time and she is doing better than I am at the moment! I will most likely do the same with some or all of my IRA also.

3. Access to free financial advice from my Fidelity rep.

4. And lastly UNLIMITED trades per month.

They also have an interesting seperate annunity program that my wife may participate in.

You give them a balance say of $100K (or any amt), and if you are under 65 they pay you 4% for life if you begin to draw. If you are over 65 it's 5% for life. So the 100K would give you $500 per month for life beginning at 65.

The interesting aspect of this program is that on each anniversery you have the possibility of recieving an increase in the yearly amount. But in NO INSTANCE will you ever receive less than $500 for the rest of your life. It all depends on how Fidelity managed your money the year prior. If the market goes up so does your yearly amount, but you will always be guarenteed a 5% RETURN FOR LIFE.

The possibility of the annual increase is brought about by the fact that the 100K is being professionaly managed for you. There are yearly managment fees of appx 1 - 1.5 % depending on whether I desire rights of survivorship if she pre deceases me. If we elect that, the $500 will continue being paid to me even if Fidelity "lost" all of the 100k.

Thanks Elgallo,

Trying to figure out what I want to do. I am making an appointment with the guy that handles my wifes 401K and see what he says.

 

[Stoplight]

Re: Bquat - have a question again about your monthly withdrawl

Yep, and I have begun the transfer process and hopfully it will be completed reasonably quickly. Afterall the gubmints involved, and I wouldn't want to suffer any delay due to the amount of money involved which is major.

The advantages are many as I see it.

1. Immediate access to my funds. No more of that, only way ya can do it, once a year adjustment of your draw, BS. If I need more I pick up the phone.

2. Many more investment choices. I currently use a news letter which concentrates soley on Fidelity funds and I model one of their 4 varing risk portfolios for my wifes Fidelity IRA and have been for quite some time and she is doing better than I am at the moment! I will most likely do the same with some or all of my IRA also.

Elgallo,

My feelings exactly !!! If anyone's going to "borrow" my TSP pot, it's just going to be me

My only difference is that my TSP will go into my self-directed IRA with USAA Investment Management Company. There, I can buy and sell individual stocks, bonds, and mutual funds. USAA offers a mix of various funds that they manage, as well, and the fees are mostly pretty low. My pot will be large enough, so they have an option of letting THEM manage it, too (for a fee, of course !). For now, I'll do it myself

We're rolling my Wife's 403(b) accounts into her USAA IRA, and I've been pleased with the service and options available, so far.


Stoplight...

 

[Elgallo]

Re: Bquat - have a question again about your monthly withdrawl

As I mentioned in an earlier post I began the process of liberating my money from the clutches of the TSP Board.

Well, and it was fully anticipated because we'er dealin with tnhe gubmint here, two weeks have gone by and the funds are still in the possession of the TSP.

First delay was associated with me not checking the lil box on the TSP form indicating that this is a request for a FULL withdrawal vice partial. BTW... the form I filled out was for a FULL withdrawal and was titled as such. There is a completly seperate form for a partial withdrawal. WTFO!

The current delay is that they just haven't responded and sent the $$$ since we corrected the withdrawal form over a week ago.

I guess breakin loose with as much money as I'm talkin about here pains them greatly.


PAY UP YOU GUBMINT SUCKAS!!

 

[nasa1974]

Re: Bquat - have a question again about your monthly withdrawl

As I mentioned in an earlier post I began the process of liberating my money from the clutches of the TSP Board.

Well, and it was fully anticipated because we'er dealin with tnhe gubmint here, two weeks have gone by and the funds are still in the possession of the TSP.

First delay was associated with me not checking the lil box on the TSP form indicating that this is a request for a FULL withdrawal vice partial. BTW... the form I filled out was for a FULL withdrawal and was titled as such. There is a completly seperate form for a partial withdrawal. WTFO!

The current delay is that they just haven't responded and sent the $$$ since we corrected the withdrawal form over a week ago.

I guess breakin loose with as much money as I'm talkin about here pains them greatly.


PAY UP YOU GUBMINT SUCKAS!!

Thanks Elgallo. I'm looking to take out a partial withdrawl somewhere around late summer early fall.

 

[Stoplight]

Re: Bquat - have a question again about your monthly withdrawl

First delay was associated with me not checking the lil box on the TSP form indicating that this is a request for a FULL withdrawal vice partial. BTW... the form I filled out was for a FULL withdrawal and was titled as such. There is a completly seperate form for a partial withdrawal. WTFO!

The current delay is that they just haven't responded and sent the $$$ since we corrected the withdrawal form over a week ago.

Thanks, Elgallo ! Gives me some ideas to watch out for when MY time comes !

Stoplight...