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Old 02-16-2012, 07:05 AM   #21
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Originally Posted by Wendy View Post
Thanks, Lakedog. I'm not completely familiar with all of our TSP options, although I hope to keep the money in it as long as possible. Luckily we have a number of avenues to raise cash if we have an ER emergency.
The TSP publication, "Important Tax Information About Payments From Your TSP Account", sums up the options fairly well. The last page covers withdrawal options if under age 55 (and 59.5).

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Old 02-16-2012, 08:43 AM   #22
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Nords and Lakedog, thank you for the TSP information and links.

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Old 02-16-2012, 12:10 PM   #23
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Originally Posted by Wendy View Post
letting us get most of the money now without the lump-sum tax hit.
Why is there a lump-sum tax hit? When DH retired he took his pension as a lump sum but there was no tax hit as it was rolled over to an IRA. We are taking larger withdrawals from it now then we will in future (still have kids at home and I'm not SS age yet) but we are only taxed as we take money out. Until it is taken out there is no tax hit.
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Old 02-16-2012, 12:25 PM   #24
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Originally Posted by Katsmeow View Post
Why is there a lump-sum tax hit?
Hi Kat -- There would be a hit because I want access to my pension money now, while I'm younger than 59 1/2, to fund early retirement. I could roll it over to an IRA without a penalty but then it would still be locked up for the next 5 years. Annuity payments have no IRS penalty and also are excluded from state and local taxes here.

Also, the lump sum is growing at a rate of 4.5% pa compounded monthly as long as it sits in the account. While I could beat that over the long run, I think it's a decent short-term return, so I'm happy to let them keep it until I need it next year or whenever DH retires.

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