Retiring/TSP process questions

[quabit]

I accepted the DOD's DRP and will over the age of 60 when I retire in the fall. I have a few questions that I hope you can help me out with. Right now, I do not plan to move my TSP but might later. Right now I need to understand what I need to do to start the distribution on time to ensure a smooth migration from work to retired life.

1. What is the process to request distributions. Is it done online or does it take a phone call. I have read the online pamphlet titled "Distributions" but it doesn't provide a step-by-step guide.

2. How soon can I submit a request for the distribution to begin or do I have wait until after 30 Sep when I am officially retired.

3. Can I select the deposit date? I would like it to start in mid Oct 25 to ensure a smooth transition

4. Can you have multiple deposit dates, or it is once a month only

3.. Once requested what is the estimated time for distributions to begin so I can plan for that in my budget.

Thanks

 

[James48843]

I can’t answer most of those, but I know that when I retired three years ago, I could not withdraw until my agency formally notified the TSP that I had switched to a non-earning status. I had planned for, and it was, about 75 days after I put in my paperwork at my agency, before everything, including TSP, recognized me as being retired. I think a good rule of thumb is to plan for 90 days after you quit working before all the faucets of money get turned on. Safe enough up to carry you through.

Once you are properly in the system as a retiree, it is very quick to get paid. I can enter a request online for a chunk of money(I took out 30k to buy a car) and it takes about a week to a week and a half to clear and make it to the bank.

I now get a monthly payment, and, from time to time, I get a chunk of cash out to do stuff.

 

[Zapple]

I can't answer your questions, but wanted to point something out that may help you feel more at ease if there are delays accessing your TSP and getting your budget straightened out. You may be owed a lump sum, possibly sizeable, for unused annual leave. I know I am (I too took the deferred resignation with DOI; I am full retirement eligible). According to people I've asked, the lump sum gets paid out in a timely fashion after the retirement date, i.e. Sept. 30 in our cases.

 

[exnavyew]

I accepted the DOD's DRP and will over the age of 60 when I retire in the fall. I have a few questions that I hope you can help me out with. Right now, I do not plan to move my TSP but might later. Right now I need to understand what I need to do to start the distribution on time to ensure a smooth migration from work to retired life.

1. What is the process to request distributions. Is it done online or does it take a phone call. I have read the online pamphlet titled "Distributions" but it doesn't provide a step-by-step guide.

2. How soon can I submit a request for the distribution to begin or do I have wait until after 30 Sep when I am officially retired.

3. Can I select the deposit date? I would like it to start in mid Oct 25 to ensure a smooth transition

4. Can you have multiple deposit dates, or it is once a month only

3.. Once requested what is the estimated time for distributions to begin so I can plan for that in my budget.

Thanks

I'd suggest calling TSP directly to get your questions answered.
Couple of items, call by phone several times to get different customer rep's.
Some are much better than others.
Also, email TSP, repeatedly if you have too, so you can get answers in writing.
Good Luck!

 

[quabit]

Thank you everyone for the replies. I do plan to sell back annual leave just in case. I have planned for months of reduced overall income so I will be good, I'm a planner so I like to be safe than caught off guard as I know we all are.

James you are correct, I reached out to TSP and finally got an email back for some of my questions. They confirmed that the option to select a withdraw or to setup distributions will not be made available in my TSP account until after they get notified. They said 60-90 days. Wish they had put that in their "Distribution" pamphlet.

As for setting up multiple distribution dates etc they failed to answer so I replied asking for answers.

 

[evilanne]

I accepted the DOD's DRP and will over the age of 60 when I retire in the fall. I have a few questions that I hope you can help me out with. Right now, I do not plan to move my TSP but might later. Right now I need to understand what I need to do to start the distribution on time to ensure a smooth migration from work to retired life.

1. What is the process to request distributions. Is it done online or does it take a phone call. I have read the online pamphlet titled "Distributions" but it doesn't provide a step-by-step guide.

2. How soon can I submit a request for the distribution to begin or do I have wait until after 30 Sep when I am officially retired.

3. Can I select the deposit date? I would like it to start in mid Oct 25 to ensure a smooth transition

4. Can you have multiple deposit dates, or it is once a month only

3.. Once requested what is the estimated time for distributions to begin so I can plan for that in my budget.

Thanks

General: You might want to consider doing and in-service withdrawal or rollover with part of your TSP balance https://www.tsp.gov/publications/tspbk12.pdf with the time delay for them to recognize that you are retired. 60-90 days seems excessive but with all the personnel actions this year it may be. It is easier to get money out of a IRA then aTSP. Per the distribution "or your protection, thedestination you wish to send a distribution from your TSP account must be on file for at leastseven days before it can receive funds." so you can add 7 days to whatever TSP says the time line is after you retire. One other thing to consider with you salary, any incentive pay and withdrawals, you may want to consider the tax backets to mak you you don't end up in a higher tax bracket.
#1 you should be able to do every thing on line...a little more complicated if you are married
#2 60-90 days after you retire
#3 They set a specific date and it can be +/- several days depending on weekends
#4 for Fixed Payments or live expectancy you can only withdraw monthly, quarterly or annualluy
#5 single withdrawal can be done within a few days

 

[JD1964]

Confirm this with a financial planner but heres what might be beneficial. First, roll the TSP into an IRA. With this there are multiple advantages. One is that your investment choices will be vastly increased in an IRA as compared to the TSP. Secondly, no matter what happens regarding your estate planning, an IRA will give your heirs the option of spreading out distribution over time (10 yrs max) thus allowing them to manage tax liability in lower brackets.

Once you have your TSP moved to an IRA, during your own lifetime, consider pulling the money in smaller increments and paying the tax in lower brackets as opposed to have larger lump sums land in higher brackets. When you pull the money from the IRA you can invest it non retirement investment platforms and still allow it to grow with the compounding interest. The key here is that you manage the tax liability on the principle at lower rates over time. The resulting investment returns will still be considered as taxable income but the principle as a whole is no longer taxable because you fulfilled the tax liability on the principle by making the incremental taxable withdrawals fall into lower tax brackets.

 

[JD1964]

Dont roll to a roth IRA because they’ll tax you in a one time lump sum.