Leaving funds in TSP and taking 72t withdrawals

[clester]

Re: Leaving funds in TSP, retire like clester....??

OK, clester, I'm clear on all the rules, know the difference between the 72t and the sepp. I'm just trying to clear up any confusion on my end regarding which one you are taking...must be a 72t and not a seppp since you are 49....unless you are going under some kind of disability...that's why I'm confused....I thought I had it all figured out, then saw your post about being 49...OK...what's this guy doing!?

As you said the SEPP is much more desireable than the 72T in that you can get more up front if you need it....like me, hehe...not giving up this awesome house on the lake...or the payment that goes with it!!

Now, one last question for anyone doing the SEPP from TSP...is there a form/calculator interface with TSP to do this conveniently, or do you have to call someone at TSP to set this up when you are readyu to pull the trigger close to 55? Thanks for all the great discussion and the welcome to the board all!

I will retire under ATC with 26 years at age 50. Take 72t payments.

TSP will not help you with this calculation.

With the age 55 rule or 72t rule you file a TSP-70 form that is for requesting a withdrawal from your TSP. You just tell them how much you want per mo. It is very simple if your using the 55 rule. Just decide how much you want for the next year.

With the 72t rule you have to do all the calculations and documentation yourself unless you want minimum distribution method based on life expectancy. TSP with do that for you. Its all on that form TSP-70.

If you use one of the other 72t methods, such as amoritization, you will also need to file an IRS form 5329 with your taxes to show you are exempt from the 10% penalty.

 

[radarvectors]

Re: Leaving funds in TSP, retire like clester....??

I will retire under ATC with 26 years at age 50. Take 72t payments.

TSP will not help you with this calculation.

With the age 55 rule or 72t rule you file a TSP-70 form that is for requesting a withdrawal from your TSP. You just tell them how much you want per mo. It is very simple if your using the 55 rule. Just decide how much you want for the next year.

With the 72t rule you have to do all the calculations and documentation yourself unless you want minimum distribution method based on life expectancy. TSP with do that for you. Its all on that form TSP-70.

If you use one of the other 72t methods, such as amoritization, you will also need to file an IRS form 5329 with your taxes to show you are exempt from the 10% penalty.

Thanks for the explanation, have a great retirement! I'll still be pumpin' J's for another 5 years while you bathe in the sun and sleep till you feel like gettin up! Good times bro!

 

[SkyPilot]

random question, i have a friend about 4 months from retirement, where can i find a good 'retirement clock'.

maybe enter target date and it counts down minutes, hours, days, weeks etc...? even better would be one that looks at work hours, work days, Pay Periods?

i think i saw a reference to one on this board late last year, maybe nnuut?, but can't find it now.

Google Gadgets has lots of these.

 

[clester]

My cell phone has a d-day counter that displays on the main screen. Now at 102!
But who's counting.

 

[clester]

So, now that retirement is imminent I have thinking of whether to leave money in TSP or rollover to an IRA. I still plan on taking 72t payments either way.

Any words of wisdom? 65 days to go!

 

[Boghie]

So, now that retirement is imminent I have thinking of whether to leave money in TSP or rollover to an IRA. I still plan on taking 72t payments either way.

Any words of wisdom? 65 days to go!

I would roll it over to an IRA.

A self directed IRA is more flexible than TSP. I would probably manage it much like TSP - rather than getting all excited and buying individual stocks and the like. But, with a self directed IRA you could invest a bit in REITs and true cash instruments (rather than the 'G Fund'). You can also invest in shorter term bonds.

 

[tsptalk]

So, now that retirement is imminent I have thinking of whether to leave money in TSP or rollover to an IRA. I still plan on taking 72t payments either way.

You can do a partial withdrawal so you can be more flexible with some investments in an IRA, but also have some in the TSP for stability.

I have some in both and I know I can get a little too aggresive in my IRA at times. Having the TSP makes me feel a little more secure that I won't blow it all someday on a wacky ETF trade.

Plus, if you have something in the TSP, you're more likely stick around and play with us.

Congratulations and good luck!

 

[clester]

I have $25,000 in a roth and $25,000 in a traditional IRA that I plan on using as an emergency fund that would be outside my 72t.

 

[clester]

You can do a partial withdrawal so you can be more flexible with some investments in an IRA, but also have some in the TSP for stability.

I have some in both and I know I can get a little too aggresive in my IRA at times. Having the TSP makes me feel a little more secure that I won't blow it all someday on a wacky ETF trade.

Plus, if you have something in the TSP, you're more likely stick around and play with us.

Congratulations and good luck!

I worry a little about that too. I don't want to blow my TSP

 

[gmace]

I found info about using the 72t amoritization method. It seems you can do a recalculation each year.

Do you still believe this to be true? My reading indicates the ONLY 72(t) method that can be recalculated yearly is the minimum distribution method which is based on life expencacy only. Ammortized and annuatized methods can not be changed once started as I read it.

 

[clester]

After considering this option I found it to be undoable. I would move it to Ira if this is what you want. I chose to leave my money in tsp and do the amortization calcs myself and requested monthly payments that will not be changed until I reach age 59.5. Remember if you do this, document how you did the calcs and file a form 5329 each tax year to claim exemption from penalty.

 

[gmace]

OK. Thats my understanding as well. Just wanted to be sure. I was hoping we could recalculate yearly to take advantage of any future rise in the fed mid-term rates, but even though we can't, it's still better than the TSP computation. Thanks.

 

[SkyPilot]

Checked with a retirem HRM dude, and he said that the TSP calculator that is provided to approximate annuity payments (Boo... annuities) is based on the same formula that TSP uses when they calc your 72t as they are both based on projected life expectancy. Hope this helps...

 

[gmace]

Checked with a retirem HRM dude, and he said that the TSP calculator that is provided to approximate annuity payments (Boo... annuities) is based on the same formula that TSP uses when they calc your 72t as they are both based on projected life expectancy. Hope this helps...

I think your HRM dude needs to double check what he is telling folks because that is misleading I think.

When TSP calculates your 72(t), they do so using only the life expectancy component and it results in basically the minimum 72(t) distribution. For example, a 50 year old with 500K would end up with about 14K/year using the TSP 72(t) calculator.

The annuity (agree... booo annuities) calculator on the other hand, uses current interest rates plus life expectancy to determine the result. Much like the 72(t) amortilization method does. As a comparison, a 50 year old with 500K buying a TSP annuity with no special features would get about 25K/year.

So he is wrong when he says that the way TSP calculates annuities and 72(t) is the same. They have in similarity only the life expectancy component... but thats where the similarity ends.

Now it would be true to say that TSP annuity calculations are similar to the 72(t) calculated using the amortizilation method because both use life expectancy AND current interest rates as a factor. However, TSP will not calculate a 72(t) for you this way. You would have to do that yourself.

Hope this helps your HRM dude..

 

[Texarkandy]

Re: 1.7% for good time...but don't forget....NO COLA...

One of the drawbacks against the 1.7% is NO COLA for years between 56 and 62 (I think it is 62, could be wrong on the end date, pretty sure tho)...what do you all think inflation will do in the next 10-15 years???
The other is having to stick around to age 56.:suspicious:

ATC/FF/LEO retirees do get COLA's on their annuity beginning at retirement regardless of age - as long as they retire on an immediate annuity (provided the CPI calls for one in any particular year)

 

[gmace]

Re: 1.7% for good time...but don't forget....NO COLA...

One of the drawbacks against the 1.7% is NO COLA for years between 56 and 62 (I think it is 62, could be wrong on the end date, pretty sure tho)...

ATC/FF/LEO retirees do get COLA's on their annuity beginning at retirement regardless of age - as long as they retire on an immediate annuity (provided the CPI calls for one in any particular year)

Depends. On a NORMAL FERS ATC retirement which is based on the 20 good years at age 50, or 25 good years at any age, we get 1.7% for the first 20 years, then 1% for each year thereafter. For this NORMAL retirement, we do get COLAS right away regardless age.

However, Public Law 108-176 added a second option for ATC retirement. This says if you have 30 years service, you can then get 1.7% for ALL ATC good time, and 1% for non-good time. So, someone who put in 30 years all ATC good time, could under this provision get 1.7% for the entire 30 years. If this provision is used however... then NO COLAS until the retiree reaches the age of 62.

So... you are both right..

 

[clester]

I thought about that option. I was one of the few at my facility that was eligible. You also have to meet the MRA, which for those born 1956-60 I think, can get this when the get 30. So you would have to work up to the last day.

Since mandatory retirement is 56. So, if you're born after that you would have to be in a staff position (or something other than live ATC) to stay on past 56

 

[Texarkandy]

Re: 1.7% for good time...but don't forget....NO COLA...

... However, Public Law 108-176 added a second option for ATC retirement. This says if you have 30 years service, you can then get 1.7% for ALL ATC good time, and 1% for non-good time. So, someone who put in 30 years all ATC good time, could under this provision get 1.7% for the entire 30 years. If this provision is used however... then NO COLAS until the retiree reaches the age of 62. .....

That's really weird IMO - why would they have added that provision ... then inserted that you forfeit COLA till 62? (unless they were trying to bribe & coerce at the same time some ATC's into staying longer?)

Of course, that said, as long Congress was doing that, I don't know why they couldn't have given all us 12d folks the 1.7% for all of our "good time" over 20 regardless of whether it was 22, 26, or 30 years.

 

[clester]

I think the goal was to give the 2nd level ATC managers higher retirement packages. It just happens that some lowly ATCers met the requirements. They (managers) can work as long as they want, say age 62.

 

[Fireant]

I think the goal was to give the 2nd level ATC managers higher retirement packages. It just happens that some lowly ATCers met the requirements. They (managers) can work as long as they want, say age 62.

Clester,

You seem to be a plethora of knowledge... simple question as I am in a similiar boat to yours... next year I will be an ATCS retiring at 50 after 27 years... the TSP 72t... how do I figure it and are there minimum and maximum amounts... child support and ex's house are expensive and I want to make sure I have this thing figured out... already got the offset and annuity figured but I need more and believe the 72t might do it... thanks... DA FIREANT