TSP Installment payment withholding error - HELP!

[evilanne]

Rcf3,
When I set up installment payments it was all done by paper & faxed in...not sure if that is still an option or not but it took me several times to find someone answering the phone to get the correct answer on withholding. Their directions are totally messed up in advising everyone to select married with 3 dependents as it should be your actual filing status.

TSP doesn't actually calculate the withholding amount. I believe it goes to Department of Treasury to do the withholding calculation.
This may be why they can't answer your question https://www.irs.gov/individuals/tax-withholding-estimator

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You can use the appropriate worksheet 1-4 at https://www.irs.gov/pub/irs-pdf/p505.pdf based on you filing status to estimate how much they will withhold. You can adjust the brackets to the 2022 figures if you wish to be more precise. Subtract your estimated calculated amount from your calculated 20% figure to determine how much additional withholdings you need and divide by the number of payments (12 monthly; 4 quarterly). If you are doing life expectancy payments you may want to add a few dollars so you don't have to deal with TSP again next year. I agree with Scout...it is easier to adjust your OPM tax withholdings.

 

[Boghie]

Since the specific dollar amount withholding option doesn't work, perhaps:

1. Initiate withholdings based on 0 deductions.
2. If that is withholding more than the 20% change to 1 deduction,
3. Rinse and Repeat till you get to near the 20% tax desired.

That way you will likely withhold a little more than 20% over the year - because of the first few months being over-withheld.

Anyway, you are just wasting time with the helpdesk. If their program isn't working it won't work. And, the 'wait till next month' comment was just to get you off the phone. They cannot do anything as evidenced by them asking you to clear the cache.

Anyway, where did the 20% withholding ratio come from? If I were you I would either have my tax dude(tte) figure out what my taxes will be for 2022 or just plunk the numbers into TurboTax (or whatever) and get a real number. Since 2017 Federal taxes have been a simple process. It is almost a flat tax now. You really don't have to guess. GlobalPack's idea is probably the route I will take, but we all have our own preferences.

 

[Globalpack]

Have you considered withholding your own taxes yourself? I LOVED the option for no withholding and since then every payment I put taxes in a separate savings account and make periodic payments at the PAY1040 website to avoid penalties.

 

[exnavyew]

A: would suggest keep trying TSP reps. Some reps are more knowledgeable than others.
B: another option would be to contact the Federal Retirement Thrift Investment Board,
for assistance as they administer TSP although my guess is that they would refer you
back to TSP itself.
https://www.frtib.gov/contacts.html

this might be of help:
https://www.tsp.gov/living-in-retirement/changing-your-withdrawal-request/

Good luck! :smile:

 

[Scout333]

Rcf3, when I retired no withholding was allowed so I increased Tax withholding on my civil service check to cover taxes on my TSP withdrawal. That is one option. You could just wait till 2-1-2022 and adjust the remaining 11 month's withholding amounts to cover the taxes estimated for the full year's TSP withdrawals. i.e. increase remaining amounts to cover. Option one worked fine for me. Still using the same process seven years later. Good luck in getting the TSP to fix your problem! Workarounds are your friend. Good luck!

 

[Rcf3]

Hello,

Over the last couple of days I’ve been trying to apply online for TSP installment payments for the first time. When I reach the federal tax withholding page in order to elect 20% withholding status I have been told by the TSP reps that I must select the fourth tab, withholding based on my martial status with an additional dollar amount. I have been advised to input married with 3 which would result in no tax being withheld, and then add the dollar amount representing the 20% I want withheld. When I do this an error message appears stating that “Your withholding amount must not exceed the amount of this payment”.

I called TSP and they advised me to clear my cache and cookies. That didn’t work. They had me enter different dollar amounts in the additional withholding box but everything above $20 resulted in the above error message. After they satisfied themselves that the amounts I was entering for the installment payments and 20% withholding are correct I was told that they believe the issue may be caused by the fact the IRS has not yet provided next year’s tax information and the TSP “wizard” may not allow this transaction until February 1. They asked me to wait a few weeks and try again.

This doesn’t seem right. Has anyone encountered this error?