TSP Withdrawal before age 55 / 59 1/2 question.

[diggusa]

Can someone explain to me all the withdrawal options available to me (except for buying and annuity, not giving my money away) that I have, while leaving my money in the TSP and not incurring the 10% penalty? I am planning on retiring before I reach age 55, so that limits my options some,I know. I am assuming the life expectancy payment option from the TSP is the same thing as the 72t option or am I mistaken there? Thanks in advance.

 

[Kaufmanrider]

Can someone explain to me all the withdrawal options available to me (except for buying and annuity, not giving my money away) that I have, while leaving my money in the TSP and not incurring the 10% penalty? I am planning on retiring before I reach age 55, so that limits my options some,I know. I am assuming the life expectancy payment option from the TSP is the same thing as the 72t option or am I mistaken there? Thanks in advance.

Leave the money in until you turn 59 1/2, or take monthly payments, either by the IRS life expectancy or by a specific dollar amount each month that you choose. Once per year you can complete a form from the TSP website changing your annual dollar amount. Once change per year.

Here is the link to the TSP Publication on all the options.

https://www.tsp.gov/forms/withdrawals.shtml

There is a POD cast on Youtube
http://www.youtube.com/watch?v=ZSlBeSr3HcE

 

[diggusa]

Thanks for the Vid. Looks like my only option is to take an annuity (not) , or let TSP figure my payments on life expectancy. I assume I have to wait 5 years or till 59 1/2 (which ever is longer) before I can change that.

 

[clester]

Thanks for the Vid. Looks like my only option is to take an annuity (not) , or let TSP figure my payments on life expectancy. I assume I have to wait 5 years or till 59 1/2 (which ever is longer) before I can change that.

You can figure what your payments would be under 72t rules yourself. Request monthly payments from tsp and don't change that until age 59.5. All you need then is to file a form 5329 with your taxes each year to be exempt from 10%. This is what I am currently doing using amortization. Check out www.72t.net. One problem now is that the interest rate you use is under 2% so all 3 72t methods will give you a fairly low payout. So, minimum dist may best until interest rates climb.

 

[Kaufmanrider]

You can figure what your payments would be under 72t rules yourself. Request monthly payments from tsp and don't change that until age 59.5. All you need then is to file a form 5329 with your taxes each year to be exempt from 10%. This is what I am currently doing using amortization. Check out www.72t.net. One problem now is that the interest rate you use is under 2% so all 3 72t methods will give you a fairly low payout. So, minimum dist may best until interest rates climb.

Thanks for the 72t.net link. I could live with the life expectency payout as it'll give me a little boost each year. Being under the FERS Special Retirement my FERS Annuity will get COLA's each year and until I reach the MRA I have no cap on my earnings. Now to figure my Social Security Supplement payment and crunch some numbers to see if I'll go next year.

 

[clester]

Thanks for the 72t.net link. I could live with the life expectency payout as it'll give me a little boost each year. Being under the FERS Special Retirement my FERS Annuity will get COLA's each year and until I reach the MRA I have no cap on my earnings. Now to figure my Social Security Supplement payment and crunch some numbers to see if I'll go next year.

Good. I'm atc, so I got the special retirement with cola as well. The supplement is just fers years divided by 40 and multiplied by the age 62 social security amount. Remember though that the supplement has no cola until it converts to social security at age 62.

 

[diggusa]

I'm trying to decide the same thing. I,ll be almost 52 when I go. The way I figure it, if you wait to long you might as well wait to age 55 so you have more options. I still plan on going early though so I can make use of the supplement and get the Cola's , if there is any.

Thanks for the 72t.net link. I could live with the life expectency payout as it'll give me a little boost each year. Being under the FERS Special Retirement my FERS Annuity will get COLA's each year and until I reach the MRA I have no cap on my earnings. Now to figure my Social Security Supplement payment and crunch some numbers to see if I'll go next year.