# Retiring with TSP

L1: Retiring with TSP I am going to retire in April at a very young age 48 (Air Traffic Controller). I have a TSP account and want to access that to get a monthly amount. To get the max amount using the 72(t) rule, should I use my own calculation or use the calculation the TSP offers on form TSP-70 checking the boxCompute my payments based on my life expectancy. And are there benefits using the TSP calculation over my own?

Thanks for the help2015-02-09 17:25, By: shaggy, IP: [68.195.162.18]

L2: Retiring with TSP Using the TSP for a 72t plan is somewhat risky because the TSP is inflexible. Some errors you might make using an IRA can be corrected, but if you made those same errors with the TSP, you cannot correct them in most cases and your plan would be busted.

If you still want to use the TSP despite the risks, I would use the calculator on this site to determine your distribution using the TSP 12/31/2014 balance, then set up the TSP for fixed dollar distributions of what the calculator here indicates. Either way, do some projections to see if the amount of the distribution will get you through 11 years adjusting for inflation. You will probably find that the 72t calculation will only generate about 4,500 per year for each 100k you have in the TSP. Will that be enough?

Also, if you have DB plan, if you worked until 50, there is a special penalty exception for public safety officials at 50, but that would require re assessment of your retirement date.

2015-02-10 00:35, By: Alan S, IP: [67.61.217.44]

L3: Retiring with TSP Thanks all for the info. I think I have my head wrapped around it now.2015-02-10 04:44, By: shaggy, IP: [68.195.162.18]

L3: Retiring with TSP Shaggy,

A couple of observations concerning TSP:

one is that there is a time delay in the processing of the intial distribution from the TSP so the midterm rate has to be low enough to account for this so I’d use the most recent rate or one that is slightly lower i.e. the rate used should be a midterm rate within the last two months of the initial distribution but if the initial distribution takes several weeks then the window might be expired(page63 in Stecker’s practical guide)

second since TSP is strict in its distributionsthat is only a monthly distribution allowed on TSP-70. I would use a stub year monthly distribution over May through December even though you can technically take the full year amount i.e. if you had a traditional IRA you could take the entire 72(t) amount for the year not just April through December but again it would be difficult with TSP restrictions (page 75 in Stecker’s practical guide)

Finallyyou coulduse a 12/31/2014 balance of the TSP but I think the safest is to use the month-end valuation immediately precedingthe initial distribution e.g. Mar-April (page 74 in Stecker’s practical guide)

Paul

2015-02-10 10:04, By: tsped, IP: [169.252.4.21]

L2: Retiring with TSP Hi Shaggy,

I moved a portion of my TSP to Vanguard, then split the account into two separate IRA’s. I then planned on using one of them for a 72T when needed. I have used the calculator on this page to work on the “numbers”. Remember you can only make 1 partial withdrawal from the TSP. After that you must make a full withdrawal.2015-02-10 02:06, By: UU, IP: [69.178.13.44]

L3: Retiring with TSP I’m in a similar situation to Shaggy but I’m a little older. Instead of starting another post, and since my question is on topic and could help Shaggy, I’ll ask it here.

I’m retiring in a couple of months and I too want to do a manual 72T directly out of my TSP. I need to do this because I’m moving to NC and for me there will be NO state tax provided it comes straight from the TSP. If I roll over, I pay state tax as it comes out of the IRA so no rollover for me.

The TSP folks can process a withdrawal fairly quickly so if I put the paper work the last day or two of December, my monthly checks will start in early to mid January so I should be safe if I do the initial math right (I’ll take the annual number from the calculators here and divide by 12 and submit that to the TSP for SEPP).

Here is my question/concern. Do I have to use the ENTIRE balance for say the amortization calculation at the time I submit/start this? I’d rather use the reverse calculator so I could get say $1500 a month out but to do that I would not be using the entire balance but about 80 to 90 percent of it. However, the money is co-mingled in TSP and only shows one balance. I can draw up my own statement where I show how I did my math but again the total in my TSP won’t match, it will be higher and I was not planning on doing the one time partial withdrawal.

Yes, I know just allowing the TSP to use their life expectancy calculation will make this much simpler but I’ll end up with a lot less per month. One last question . . . allowing TSP to do the life expectancy calculation means I can start anytime in the year and not need to worry about the year end payout not matching the first year (if I start SEPP in June), right? If so is that the same for the manual method I described above? Do I really have to time amortization and annuitized methods to start in January for monthly payments?

Thanks!2015-04-06 04:22, By: G-man, IP: [24.9.253.124]

L4: Retiring with TSP G-man…

>>Do I have to use the ENTIRE balance for say the amortization calculationYes. Or, you have to actually split the account into 2 separate accounts – probably only possible if you roll into an IRA.

>>allowing TSP to do the life expectancy calculation meansThey will make annually increasing payment to you at some point during the year – the timing is not important.

>>Do I really have to time amortization and annuitized methods to start in January for monthly payments?If you are requesting the withdrawal and you want to start next year, just make sure that by 12/31 that you have taken out the exact annual amount – again it doesn’t have to be the same amount each month so plan your withdrawals accordingly.

2015-04-06 10:40, By: Gfw, IP: [205.178.65.222]