TSP - 72(t) - what form?

[stevepsd]

Hello,

This is my first post on TSPTalk, so be gentle....

I retired from Federal Service (US Navy) after 30 years under a VERA in March 2014 (2 years before my MRA), so I am receiving my FERS retirement and SRS will kick in next year when I do hit my MRA of 56 (assuming SRS is still around).

Anyway, I have been reading this forum (& others) on 72(t) distributions from TSP and have a couple of questions. My plan was to start taking distributions next year for the minimum required of 5 years. Does TSP give you the option to stop taking distributions after that period? The entire TSP site is very quiet on 72(t), but I did find a TSP Tax Notice TSP-536 that does at least mention SEPPs.

Would you use the TSP Form 70 'Request for Full Withdrawal'? filling out what sections? It looks like you cannot change your withdrawal at a later date if you use this form, or?!?!?

Thanks!

-steve

 

[Maricar19]

Steve, here are some articles on 72t IRS SEPP:

Accessing Your TSP Account After Retirement : FedSmith.com

http://www.irs.gov/Retirement-Plans...garding-Substantially-Equal-Periodic-Payments

Check out 72t.net

Hope this helps you. Also if you log in to your tsp account and send private message to TSP. Response time is 24 hours, or you can call TSP for more accurate information.

Maybe some retired TSPtalkers will read your post and tell you which form to complete also there is an old thread on 72t in this site.

 

[clester]

You fill out the form requesting full withdrawal with monthly payments. You have to do the 72t calculations yourself and request the amount you want. You have the option each year to change monthly amount. Tsp will notify you each year that you can do that. You'll break the 72t rules if you adjust before 5 years or age 59.5 and owe all back penalties. With the really low rates you may want to do the minimum distribution that tsp offers. Then you get to make a one time change I believe. I'm taking 72t withdrawals now if you have any more questions.

 

[Lakebound]

You fill out the form requesting full withdrawal with monthly payments. You have to do the 72t calculations yourself and request the amount you want. You have the option each year to change monthly amount. Tsp will notify you each year that you can do that. You'll break the 72t rules if you adjust before 5 years or age 59.5 and owe all back penalties. With the really low rates you may want to do the minimum distribution that tsp offers. Then you get to make a one time change I believe. I'm taking 72t withdrawals now if you have any more questions.

Does this differ from the "life expectancy" formula? Do I need to do those calculations too and is this the same form? I'll bet you folks in retirement really get tired of these repeat questions? Huh?

Frank

 

[clester]

Does this differ from the "life expectancy" formula? Do I need to do those calculations too and is this the same form? I'll bet you folks in retirement really get tired of these repeat questions? Huh?

Frank

Glad to help. If you tell tsp to give you payments based on life expectancy (this is the only option to avoid penalties unless you meet some other exemptions like being 59.5) it is the same as 72t minimum distribution method and tsp will do all the work for you. The way it's calculated you should get an increase each year but starts out lower than other methods. It s same form I think. It's considered a full withdrawal but you have one chance to change it I believe. So at 59.5 you could go to monthly payments of your choosing or full lump sum.

 

[Maricar19]

Glad to help. If you tell tsp to give you payments based on life expectancy (this is the only option to avoid penalties unless you meet some other exemptions like being 59.5) it is the same as 72t minimum distribution method and tsp will do all the work for you. The way it's calculated you should get an increase each year but starts out lower than other methods. It s same form I think. It's considered a full withdrawal but you have one chance to change it I believe. So at 59.5 you could go to monthly payments of your choosing or full lump sum.

Clester, you are such a wealth of information for us, future retirees.

 

[Lakebound]

Glad to help. If you tell tsp to give you payments based on life expectancy (this is the only option to avoid penalties unless you meet some other exemptions like being 59.5) it is the same as 72t minimum distribution method and tsp will do all the work for you. The way it's calculated you should get an increase each year but starts out lower than other methods. It s same form I think. It's considered a full withdrawal but you have one chance to change it I believe. So at 59.5 you could go to monthly payments of your choosing or full lump sum.

Thank you!

Clester, you are such a wealth of information for us, future retirees.

I concur. And I appreciate all the advice and help offered here.

Frank

 

[Kaufmanrider]

Careful with distributions (ie monthly withdrawals under 72t). Once started the rules require withdrawals for 5 years or until 59.5, whichever is later. I rolled my TSP into an IRA and I am receiving payments under the annuitized method.
Couple good links.

http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-Substantially-Equal-Periodic-Payments

72t.net

 

[clester]

When I retired I wa able to use 3.5% as my withdrawal rate so the amortization method gave me the most money. But rates are so low now. It's basically 120% of G fund rate. I used 72t.netfor all my planning. Good calculators and message board

 

[Maricar19]

Thank you!



I concur. And I appreciate all the advice and help offered here.

Frank

Frank - April 2016 is my exact 30 years., but I intend to stay until the end of 2016 unless...

 

[Lakebound]

Frank - April 2016 is my exact 30 years., but I intend to stay until the end of 2016 unless...

I will have 32 years between the Navy and this current position. I bought back my 10 years Military of course. My recent promotion to Management would normally dictate that one would want to work the last three for a high three scenario at that new rate. For me that would mean staying until March of 2017 and I'm not willing to do that.

I work in a higher stress vocation IMO and adding to that, a Management position I have decided that the extra $80.00 per month for an additional 11 months is just not worth it.

I'm leaving when I can. My life has been good and it will only get better and if I need to work part time for pocket money and to stay busy, I plan to do that. In my line of work, it has always been the ones who didn't stay busy that get buried 10-12 years after retirement.

I'm not going out like that. My wife and I have both worked too hard not to enjoy our lives together while we are still young and active. I started this at the age of 18 and I have never been able to wear anything but a uniform my whole life. I want something else and I know it is time. Some people's "time" is later, some not.

Frank

 

[stevepsd]

You fill out the form requesting full withdrawal with monthly payments. You have to do the 72t calculations yourself and request the amount you want. You have the option each year to change monthly amount. Tsp will notify you each year that you can do that. You'll break the 72t rules if you adjust before 5 years or age 59.5 and owe all back penalties. With the really low rates you may want to do the minimum distribution that tsp offers. Then you get to make a one time change I believe. I'm taking 72t withdrawals now if you have any more questions.

Chester,

Thank you for the info. I understand about not changing the distribution for 5 years or age 59.5 (which ever comes last), but how about after meeting the 72t time/age requirements? Can you elect to stop taking withdraws, say until you are required to take RMD at 70.5? Or start taking a much larger distribution - say if you know you have some big expenses coming up and need the money for a particular year?

I assume that these TSP distributions will not affect your eligibility for the FERS Special Retirement Supplement (SRS).

Thanks for all the info!

-steve

 

[Kaufmanrider]

I'll chime in. Once you meet the 5 years or 59.5 (later of two) you can do what you want with the money. Now, TSP might have different rules on frequency of withdrawals after the criteria has been met? I'd contact TSP.

I rolled my TSP into an IRA and am taking my distributions monthly, however if the need arose I could take the whole yearly dollar amount out at one time, semi-annually, quarterly, etc. As long as I only take out the calculated annual amount each year, no more, no less.

I believe only earned income effects the FERS SRS.

Chester,

Thank you for the info. I understand about not changing the distribution for 5 years or age 59.5 (which ever comes last), but how about after meeting the 72t time/age requirements? Can you elect to stop taking withdraws, say until you are required to take RMD at 70.5? Or start taking a much larger distribution - say if you know you have some big expenses coming up and need the money for a particular year?

I assume that these TSP distributions will not affect your eligibility for the FERS Special Retirement Supplement (SRS).

Thanks for all the info!

-steve

 

[GUCHI]

LB. I say go for it. You sound like me before I retired. I loved my work it was very fulfilling BUT the bs was getting to be too much for me to take. I was young and active and wanted to get out before they beat me down so I did in 2014 at 55 yrs and 35 yrs of service with NRCS. And oh some good chatter on the retirement thread. I asked myself the question how much money will it take to be happy??? My answer was its not how much one has but rather what you do with it. Good luck and do check out the thread.

 

[stevepsd]

I'll chime in. Once you meet the 5 years or 59.5 (later of two) you can do what you want with the money. Now, TSP might have different rules on frequency of withdrawals after the criteria has been met? I'd contact TSP.

I rolled my TSP into an IRA and am taking my distributions monthly, however if the need arose I could take the whole yearly dollar amount out at one time, semi-annually, quarterly, etc. As long as I only take out the calculated annual amount each year, no more, no less.

I believe only earned income effects the FERS SRS.

What TSP allows you you is my question, since they are really silent on the whole 72t issue. I don't know if TSP allows you to start/stop monthly distributions. And it appears that you cannot take a annual distribution, only a complete or monthly from them as well.

So what will TSP let you do? I know I can roll it over to somewhere else but I have been comfortable with TSP so far, but I might if they are to inflexible with my money.

 

[clester]

After age 59.5 or 5 year requirements you have one chance to change. Go to monthly payments of your choice which you can change monthly or lump sum or roll over to IRA. I will change to monthly payments of my choice. If you don't need much you could just take say $100 a month and later you want to buy a car or need more then the next year bump it up to $2000 a month etc. you get a notification in November that says you can change.

Since I'm doing monthly payments already I'll just start changing the amount after age 59.5 if I want...easy

 

[Lakebound]

After age 59.5 or 5 year requirements you have one chance to change. Go to monthly payments of your choice which you can change monthly or lump sum or roll over to IRA. I will change to monthly payments of my choice. If you don't need much you could just take say $100 a month and later you want to buy a car or need more then the next year bump it up to $2000 a month etc. you get a notification in November that says you can change.

Since I'm doing monthly payments already I'll just start changing the amount after age 59.5 if I want...easy

So you originally went with life expectancy calculated payments, correct?

Frank

 

[clester]

So you originally went with life expectancy calculated payments, correct?

Frank

I used the 72t amortization calculation using the calculators on 72t on the Net | SEPP, 72t, and /72q Distributions and then requested monthly payments from tsp based on those calculations.

 

[Lakebound]

I used the 72t amortization calculation using the calculators on 72t on the Net | SEPP, 72t, and /72q Distributions and then requested monthly payments from tsp based on those calculations.

Thank you.

 

[Kaufmanrider]

With the really low rates you may want to do the minimum distribution that tsp offers. Then you get to make a one time change I believe. I'm taking 72t withdrawals now if you have any more questions.

Rev. Rul. 2002-62 permits a one-time change from either the amortization method or the annuitization method to the required minimum distribution method. If you begin with the required minimum distribution, i.e., life expectancy, you can not change your method to the amortization or annuitization during the 5 year/age 59.5 time period.

Retirement Plans FAQs regarding Substantially Equal Periodic Payments

I opted to start my 72T via the annuitized method (highest amount) because it is a one time calculation and the amount will stay the same, whereas with the minimum distribution (life expectancy) it is recalculated annually and can go up, or down, depending on how your account balance goes each year. I retain the option to change to the life expectancy.

FYI I retired at 49 (Jan 2014 the year I turned 50) under the Special FERS Retirement for LEO's.