Required Minimum Distribution (RMD) Question

[Milehghcty]

Why is the amount TSP estimates to satisfy RMD much higher than if I use the IRS RMD tables? I would think the same tables would apply. In my case, it makes a difference of $20k per year! I’d like the smaller amount for tax purposes.

I turn 72 in Jan of 2024, so have at least a year extension before I must take the RMD.

 

[tsptalk]

Hi Milehghcty. Hopefully someone who knows will chime in. I just wanted to say hey and welcome you after your first post - even though you've been a member for 15 years already.

For now, here is ChatGPT's response to your question:

The Thrift Savings Plan (TSP) and the IRS have different methods for calculating Required Minimum Distributions (RMDs), which can lead to discrepancies in the estimated amounts. Here's why you might be seeing a difference between the TSP estimate and the IRS RMD tables:

Assumed lifespan and calculation method:
The TSP may use a different assumed lifespan or distribution calculation method than the IRS. The IRS typically uses the Uniform Lifetime Table to calculate RMDs, which considers the account holder's age and life expectancy. TSP might use a different actuarial table or methodology that results in higher RMD amounts.

Withdrawal options:
The TSP might offer different withdrawal options or methods than those prescribed by the IRS RMD tables. Certain withdrawal methods might result in higher distributions than those calculated using the IRS tables.

Account-specific factors:
The TSP might take into account specific factors related to your account, such as the type of TSP account you have, beneficiary designations, or other unique circumstances, which can impact the calculated RMD amount.

Updates and changes:
IRS regulations and tax laws might change over time. The TSP and the IRS may not always align their methodologies, which could lead to variations in the RMD estimates.

Frequency of calculation:
The TSP and IRS may update their RMD calculations at different intervals, leading to differences in the estimated amounts.

To ensure that you're complying with the IRS RMD requirements accurately, it's essential to use the IRS RMD tables and guidelines for your specific age and account balance. The IRS tables are widely accepted as the standard for RMD calculations, and they are used by most retirement account providers to determine RMD amounts.

If you're concerned about the difference in RMD amounts between the TSP estimate and the IRS tables, you should consult with a financial advisor or tax professional who can review your specific situation and provide guidance based on the most current regulations and IRS guidelines. They can help you navigate the requirements and plan your withdrawals in a tax-efficient manner while ensuring compliance with the IRS rules.

 

[nasa1974]

Why is the amount TSP estimates to satisfy RMD much higher than if I use the IRS RMD tables? I would think the same tables would apply. In my case, it makes a difference of $20k per year! I’d like the smaller amount for tax purposes.

I turn 72 in Jan of 2024, so have at least a year extension before I must take the RMD.

Milehghcty, Welcome.

I turn 72 in May 2024 and I plan to transfer my TSP funds over to my Edward Jones 401k account this year. This way I don't have two accounts to deal with and I'd rather not deal with TSP. Just a thought.

 

[Milehghcty]

I’ve also met with our local Edward Jones office and thinking about doing the same - however thought about not moving all TSP money and leave a couple of hundred K in TSP just so I have the option to move back again if the need arises. EJs fund expense are about a half percent higher than TSP, but gives me the option to withdraw a smaller amount (not the TSP Life Expectancy amount) and direct which funds the money comes out of. The way I understand TSP works is they take a percentage of all the funds (me 6 diff funds) your are invested in - including Roths (which I don’t have in TSP).

 

[Milehghcty]

I believe this is the table TSP uses for life expectancy for RMD calculations. The 16.4 at 73 y/o corresponds to the amount TSP estimates to pay my RMD. The IRS RMD table indicates it should be 26.5. That’s accounts the $20k difference in my case.

 

[nasa1974]

It can be confusing.

 

[Bullitt]

Make sure you're using the correct table. There are different tables depending on your dependent situation.

In your case, there is a 26.5 at age 73 in table III - https://www.irs.gov/pub/irs-pdf/p590b.pdf

 

[Milehghcty]

Just a follow-up to my issue from a year and a half ago. I did take my RMD in December 2025 (turned 73 Jan 2025) and the amount TSP calculated was from the IRS table. So it was the amount on December 31, 2024 divided by 26.5. By the way, the amount you have to withdraw is on shown on your TSP account in January (in the year you turn 73). You will have to withdraw this amount before December 31. I already know the amount I must withdraw for 2026 - and can withdraw monthly or anytime during 2026. It was easy to make the request on-line and the amount was in my account about 4 business days later. Your wife/spouse will get an email and must acknowledge - the email is sent the same time you make the request.

BTW. I did transfer 80% of my TSP into Edward Jones in June 2024, which allows me to direct where to withdraw my RMD instead of like TSP which takes it out of each of your funds. If TSP allowed me to direct which funds the RMD comes from, I’d roll my money back into TSP. Fund management costs are nearly 1/2 as much in TSP vs Edward Jones!

 

[nasa1974]

Just a follow-up to my issue from a year and a half ago. I did take my RMD in December 2025 (turned 73 Jan 2025) and the amount TSP calculated was from the IRS table. So it was the amount on December 31, 2024 divided by 26.5. By the way, the amount you have to withdraw is on shown on your TSP account in January (in the year you turn 73). You will have to withdraw this amount before December 31. I already know the amount I must withdraw for 2026 - and can withdraw monthly or anytime during 2026. It was easy to make the request on-line and the amount was in my account about 4 business days later. Your wife/spouse will get an email and must acknowledge - the email is sent the same time you make the request.

BTW. I did transfer 80% of my TSP into Edward Jones in June 2024, which allows me to direct where to withdraw my RMD instead of like TSP which takes it out of each of your funds. If TSP allowed me to direct which funds the RMD comes from, I’d roll my money back into TSP. Fund management costs are nearly 1/2 as much in TSP vs Edward Jones!

Rolled over all of my TSP into my Edward Jones account. First RMD was December. After taxes the amount went into mutual bonds for now. Haven't decided monthly or yearly withdrawals.

 

[Milehghcty]

Haven’t decided what to do with RMD yet, but maybe should park in a bond mutual fund at EJ. Just sitting in a 3.30% interest bearing taxable account for now. I’ll prob just wait until Dec again this year to take my RMD from TSP and EJ.

 

[evilanne]

Just a follow-up to my issue from a year and a half ago. I did take my RMD in December 2025 (turned 73 Jan 2025) and the amount TSP calculated was from the IRS table. So it was the amount on December 31, 2024 divided by 26.5. By the way, the amount you have to withdraw is on shown on your TSP account in January (in the year you turn 73). You will have to withdraw this amount before December 31. I already know the amount I must withdraw for 2026 - and can withdraw monthly or anytime during 2026. It was easy to make the request on-line and the amount was in my account about 4 business days later. Your wife/spouse will get an email and must acknowledge - the email is sent the same time you make the request.

BTW. I did transfer 80% of my TSP into Edward Jones in June 2024, which allows me to direct where to withdraw my RMD instead of like TSP which takes it out of each of your funds. If TSP allowed me to direct which funds the RMD comes from, I’d roll my money back into TSP. Fund management costs are nearly 1/2 as much in TSP vs Edward Jones!

I'm glad everything worked out for you. The amounts should be the same.

Why is the amount TSP estimates to satisfy RMD much higher than if I use the IRS RMD tables? I would think the same tables would apply. In my case, it makes a difference of $20k per year! I’d like the smaller amount for tax purposes.

I turn 72 in Jan of 2024, so have at least a year extension before I must take the RMD.

To answer original question, in case anyone else has similar issue. You need to make sure you are looking at the right table and that TSP or broker have the correct information. From Publication 590-Individual Retirement Arrangements (IRAs) https://www.irs.gov/pub/irs-pdf/p590b.pdf

Appendices. To help you complete your tax return, use the following appendices that include worksheets and tables.
1. Appendices A-1, A-2, and A-3—Worksheets for Determining Required Minimum Distributions.
2. Appendix B—Life Expectancy Tables. These tables are included to assist you in computing your required minimum distribution amount if you haven't taken all your assets from all your traditional IRAs before age 701/2 , age 72, or age 73, whichever applies.
a. Table I (Single Life Expectancy).
b. Table II (Joint Life and Last Survivor Expectancy).
c. Table III (Uniform Lifetime).
Which table you use depends on if you are married and the age of your spouse.

Note: Publication 721Tax Guide toU.S. Civil Service Retirement Benefits addresses TSP but does not mention distributions it references Pub 590-B https://www.irs.gov/pub/irs-pdf/p721.pdf

Note: When TSP issued my 1st Life Expectancy (LE) payment they used the current value rather than the EOY balance. They also recalculated it when they switched over to the new contractor but that year IRS updated the tables and the old contractor had not updated the rates. I'm not sure exactly what the new contractor did but it didn't really calculate the proper amount for the year but the amount was minor and I was stuck with 72t rules and not worth additional effort. Other than those two times the LE payments were correct. The discrepancy may have been that they had not updated the IRS rates because the new rates result il lower RMD. It is always good to challenge TSP os somethng doesn't make sense becaise TSP does make mistakes.