specific $ monthly w/d from TSP acct – 72(t) eligi

L1: specific $ monthly w/d from TSP acct – 72(t) eligiI retired recently, at age 51, from a 26 year federal law enforcement career. I am thus
happily one of the (dwindling, but I hope very slowly!) civil service
pensioneer tribe.
I worked an “extra” year in part with the goal of getting more in my
Thrift Savings Plan (fed employee IRA type plan), and did get the whole 2007 contribution in before I went. I am now
considering taking some $ out of the account for the next several years
via the substantially equal periodic payment route.
Per my reading of the TSP forms, and my limited understanding of the
IRS 72(t) stuff, I think I would avoid the IRS early withdrawal penalty
if:
I withdraw using the periodic monthly payments that continue to I”m 59.5;
using a “specific dollar amount” based on fixed amortization method;
said amount pulled from calculator (such as that dinkytown.net offers), which purports to be in step with current IRS (6.10% this month)
assumptions. (The dinkytown site, and others similar, offer 3 methods for
calculating distribution amounts: life expectancy, amortized life
expectancy, and annutized life expectancy.)
What gives me pause is the TSP person I spoke with was
adamant that if I went with a specific dollar amount periodic payment
option vs the monthly payments based on IRS life expectancy table
(which are the only two “periodic payment” options TSP offers) I would
definitely incur the 10% early penalty; where she said I would not (if
I did the IRS form correctly) with the monthly payments based on IRS life expectancy.My other sticking point is the withdrawal form is titled “Request for
Full Withdrawal” and one TSP person told me there was absolutely no
avoiding “full” withdrawal once I set down that path. But further
reading & telephoning convinced me while I might not be able to
totally stop the monthly payments once started, I do have the option to
alter the amount to the minimum – which they tell me is $25 – once a
year. Per my IRS reading, it seems like I”d best not alter anything
until I”m 59.5, but after that point seems like I could effectively
“stop” the withdrawal by changing payments to $25 yr.
So, can anyone tell me they have indeed made such (specific dollar
amount) periodic withdrawals from their TSP account, and successfully
avoided the IRS early withdrawal penalty? (And if so, is accounting for
the payments each year at tax time fairly straightforward?) Or should I
play it safe and go with the TSP offering based on life expectancy?

2007-08-09 11:27, By: zaniew, IP: [68.160.63.95]

L2: specific $ monthly w/d from TSP acct – 72(t) eligiIt seems to me that the TSP should be a little more helpful when it comes to clientslike you. I would write a letter to the Executive Director and tell him to establish a 72tdivision, especially in light of the fact that many federal workers want to receive a regular income free of that 10 percent tax and do not want to rollover to an IRA. It seems to me that your TSP could be just a little more client friendly. Best Practices includes helping the client with a 72t plan if the TSP wants to keep you as a client for the rest of your life which I believe is their stated objective, as it should be.2007-08-09 16:53, By: Joel, IP: [24.187.32.203]

L2: specific $ monthly w/d from TSP acct – 72(t) eligiHello zaniew:
I think you are getting a waterfront of good advice; sorta advice and bad advice which are most likely a mixture of plan rules and IRS rules as well as some clerk”s (mis)understanding of same.
I would take a full distribution from the TSP and put it all in a discount brokerage account somewhere just to get out of the clutches of the TSP people. Next, get smart primarily by reading everything you can find on this website.
Then, ask for more help.
TheBadger
wjstecker@wispertel.net

2007-08-09 17:05, By: TheBadger, IP: [72.42.66.61]

L2: specific $ monthly w/d from TSP acct – 72(t) eligiAnd if you do please be forewarned that you will be giving up an investment lineup where each of the funds sport expense ratios that are by far the lowest of any in the market place including The Vanguard Group.2007-08-09 17:30, By: Joel, IP: [24.187.32.203]

L2: specific $ monthly w/d from TSP acct – 72(t) eligiI appreciate replies, but I”m still looking for someone to tell me “Go ahead, withdraw your TSP funds via monthly payments using specific dollar amount based on fixed amortization method, and you will be able to avoid the 10% early withdrawal penalty, so long as you continue through age 59.5.” Better yet, would be someone telling me they”ve done it.Re pulling funds out and going to a discount brokerage, nooooo. I”m convinced the TSP offers the best deal going at the least expense. I”m more than happy with TSP fund choices, but more so with low expenses. Re choices, I used to mix & match G & F funds, but the last few years I”ve been 100% L funds, first 2040 and more recently, 2020.Yes, it”s a pain trying to get clear info on phone, or puzzling over the forms, as I consider which of the two periodic payment withdrawal options to use, but I just need to get off on the right foot and I anticipate no hassles after that.On the other hand, if someone can give me a good opinion or reason on why I would definitely get whacked with the 10% early withdrawal penalty if I used specific dollar amount monthly periodic payments, let me know that too. (But why should TSP withdrawals have unique qualities when it comes to 72(t)? Seems like if you can withdraw that way from other funds and meet IRS requirements using 72(t) why not TSP?)2007-08-09 19:10, By: zaniew, IP: [68.160.63.95]

L2: specific $ monthly w/d from TSP acct – 72(t) eligiDo you honestly believe that our Congressmen could ever write understandable regulations for TAXES (IRS), RETIREMENT PLANS, AND GOVERNMENT PLANS (TSP), and to do it so that they were consistent rather than in conflict with each other ? If you believe that, I have a bridge in Brooklyn to sell you, if it doesn”t collapse first because Congress thinks it”s more important to spend $ 250 million for a highway/bridge in Alaska to benefit 50 people, rather than fixing our infastructure, or funding education or health care.2007-08-09 20:03, By: dlzallestaxes, IP: [141.152.252.246]