Govt TSP = SEPP

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L1: Govt TSP = SEPP I am retiring on 12/31/06at age 50 and would like to setup a SEPP on my TSP balance. My agency admin types do not understand 72t at all and are no help.I have been told around 45 days after I retire I will be notified by TSP about my balance and asked whatI plan to do with it. I assume someplace there is a specific form I can use to set up a SEPP with the Gov”t TSP program. I have used the calculators and plan to withdraw5% a year (under the maximum allowable right now). There is almost no info available on setting up a TSP SEPP plan and I would appreciate any advice on how to deal with the Thrift Saving Program on this issue. 2006-11-30 06:55, By: Jim, IP: [76.184.170.25]
L2: Govt TSP = SEPPHello Jim:
Admittedly, I do not get often involved with government TSPs; hoever, my recollection is that a TSP is qualified plan just like any other qualified plan. If so, you have two choices:
1. complete whatever plan forms are necessary to commence periodic withdrawals from the TSP all under the presumption that the TSP supports periodic withdrawals.
2. Roll the TSP account into an IRA at the financial institution of your choice and repeat step (1) above.
TheBadger
wjstecker@wispertel.net
2006-12-02 08:30, By: TheBadger, IP: [72.42.66.187]

L2: Govt TSP = SEPPHello Jim:
Admittedly, I do not get often involved with government TSPs; hoever, my recollection is that a TSP is qualified plan just like any other qualified plan. If so, you have two choices:
1. complete whatever plan forms are necessary to commence periodic withdrawals from the TSP all under the presumption that the TSP supports periodic withdrawals.
2. Roll the TSP account into an IRA at the financial institution of your choice and repeat step (1) above.
TheBadger
wjstecker@wispertel.net
2006-12-02 08:30, By: TheBadger, IP: [72.42.66.187]

L2: Govt TSP = SEPPHello Jim:
I have worked with TSP quite extensively, and my recommendation is to select “Item 2″ in TheBadger”s llist … process a Trustee-to-trustee transfer to the IRA of your choice and then set up your SEPP. You can set up a TSP-based SEPP, but it is a hassle. Save yourself some major grief, and getbetter investment and income payment choices by going the IRA route. In this case, cheap fees is not the deciding factor.
Having said this, if you are military and have tax-free funds in the TSP, then you have some other considerations to evaluate.
Good luck.
Jim2006-12-08 09:18, By: Jim, IP: [70.184.2.72]

L2: Govt TSP = SEPPJim,
I”m interested with what you said about it being a hassle setting up a SEPP with TSP. Can you expound on that?2007-01-17 05:05, By: Ken, IP: [63.162.143.21]

L2: Govt TSP = SEPPYour involvement will be required to the same degree if you rollover to a no-load mutual fund group like The Vanguard or remain with the TSP. If you are satisfied with your investment menu stay put! If you desire more fund selection then go to The Vanguard. In either case I would invest all of your money in the appropriate Target Date fund and forget about going to a broker with the idea that you can do better than the benchmark indices.2007-01-17 05:49, By: Joel, IP: [24.187.32.203]

L2: Govt TSP = SEPPJim:
Are you retiring from active duty military, or from CSRS/ FERS? I guess you could also have a combination retirement, but I”m trying to get to a specific point. Is your TSP funded by all employment as either CSRS or FERS, or is it funded from active duty military service? If you have both then I believe you have two TSP accounts; one from military service and the other from CSRS / FERS.
Before I try to comment further please clarify your status.
Jim2007-01-17 06:56, By: Jim, IP: [70.184.2.72]

L2: Govt TSP = SEPPJim,
I”ll be retiring from the federal government & all my time is in FERS. I have no time contributing to the TSP as a millitary member.2007-01-18 08:11, By: Ken, IP: [63.162.143.21]

L2: Govt TSP = SEPPJim,
You haven”t yet responded to my last post, but I”m going to jump the gun a bit.. regarding your post that a 72T from a TSP can be a hassle.. I”m presuming that someone with a TSP that”s entirely federal, not military andall FERS.. would not be a hassle to set up?2007-01-24 12:29, By: Ken, IP: [63.162.143.21]

L2: Govt TSP = SEPPKen:
My appologies for not addressing this sooner. And right now I don”t have time to get into my usual detailed mode. However, checkout the forms section of the TSP web site and review Forms 70 and 77, and the instruction booklets for each.
You will find that you can specify an amount to withdraw on a monthly basis. If you can compute the correct 72(t) amount and complete the form then it will work. Check out the “Life Expectancy” discussion. This does not comply with 72(t). TSP really wants you to either move the money to an IRA or let them buy you an annuity.
I”ll be back tomorrow.
Jim2007-01-24 12:52, By: Jim, IP: [70.184.2.72]

L2: Govt TSP = SEPPJim,Not that I”m interested because I am set on amortization. However, I thought that if I requested the TSP to compute my monthly payments based on life expectancy, that is the same as the 72t life expectancy method which is one of the three: amortization, annuitization and life expectancy methods.2007-01-29 12:51, By: Ken, IP: [64.222.104.56]

L2: Govt TSP = SEPPThanks for all the replies. Well, Im now officially retired and have decided to proceed with takinga flat 5% (under the current max) from my TSP account in compliance with 72T and usingthe amortization table posted to calculate the dollar amount.I willuse the TSP Form 70 and specify that dollar amount per month in Section IV, Block 23.I will document this decision and methods used for the calculationwith the handy form provided here on this site (to be used starting with my 2007 taxes). I am staying in TSP due to extremely low costs andthe well performing dollar averaging lifecycle funds. I am 70% in theincome fund and 30% in the 2020 fund (so that by 2020 it will all be the most conservative income fund). My plan is to use half the income from my TSP to pay principal on my house and the rest will be “investment” money. My financial plan in a nutshell.2007-01-29 20:04, By: Jim, IP: [76.184.177.131]

L2: Govt TSP = SEPPJim & Ken:
Sorry about the delays making this post but other activity took priority. Like I said earlier, study the information booklets and the forms onthe TSP web site. It is quite straight forward. Don”t waste time calling the TSP center for 72(t) information as they don”t know anything about it. Furthermore, since 72(t) is a tax question and they are not tax advisors, they can”t legally give information even if you found someone with extensive knowledge.
Ken, let”s address your question … Not that I”m interested because I am set on amortization. However, I thought that if I requested the TSP to compute my monthly payments based on life expectancy, that is the same as the 72t life expectancy method which is one of the three: amortization, annuitization and life expectancy methods. Not true. Here is the code cite directing how theycompute thisand it does not comply with 72(t) requirements.There”s no 120% FMR element in this computation. It simply uses the IRA distribution tables based on age.
If you choose to have the TSP compute your payments, your payments will be computed using the IRS Single Life Table, Treas. Reg. 1.401(a)(9)-9, Q&A 1 (for participants age 69 and younger) or the Uniform Lifetime Table, Treas. Reg. 1.401(a)(9)-9, Q&A 2 (once a participant turns 70).
Jim. If you used the info on this site to calculate your 72(t) distribution and it”s all documented, which it sounds like you have done, then you have a monthly amount to fill in to Section IV, Line 23c to run your SEPP Plan. Be aware of the following two items:
1.The first payment must start within the timeframe of your calculations.If you use December, 2006, FMR rate, then the first distribution must begin no later than February, 2007.
2.Each monthly distribution will be subject to the mandatory 20% withholding of Federal Income Tax. Since you are taking the money directly from the TSP and not transferring it to an IRA, the mandatory withholding rules apply. This could affect your spending plans and you should be aware of it.
Good luck to you and others.
Jim2007-01-30 12:01, By: Jim, IP: [70.184.2.72]

L2: Govt TSP = SEPPJim:
The whole purposeof a menu of Target Date funds is toselect just one.2007-01-31 05:17, By: Joel, IP: [24.187.32.203]

L2: Govt TSP = SEPPJim:
I re-read your last post this morning, and the following sentence raised a question.
Well, Im now officially retired and have decided to proceed with takinga flat 5% (under the current max) from my TSP account in compliance with 72T and usingthe amortization table posted to calculate the dollar amount.
Will you please clarify what “amortization table posted” that you used? If it is on the TSP site then I doubt it qualifies as being 72(t) compliant. The only tables I could find are for estimating annuity payouts, which are associated with having TSP purchase an immediate annuity. Those are stable tables and do not take into account all of the variables associated with a compliant SEPP Plan.
Jim2007-01-31 05:53, By: Jim, IP: [70.184.2.72]