Green Jeans
Dryer sheet wannabe
- Joined
- Mar 28, 2006
- Messages
- 14
This could be subtitled "stop me before I do something stupid". I retired 7/3/07 , 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 TSP, 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. I hate to stop growth in the account (I ended up with about $245K) but we have several investment property mortgages that will be finished in the next 5-10 years so I'm not too concerned.
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 Financial Calculators from Dinkytown.net offers;
which purports to be in step with current IRS (6.10% this month) assumptions. (This 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 answering my questions 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 other.
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?
Meanwhile, I feel like I will continue to enjoy "summer vacation"... ad infinitum.
I worked an "extra" year in part with the goal of getting more in my TSP, 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. I hate to stop growth in the account (I ended up with about $245K) but we have several investment property mortgages that will be finished in the next 5-10 years so I'm not too concerned.
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 Financial Calculators from Dinkytown.net offers;
which purports to be in step with current IRS (6.10% this month) assumptions. (This 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 answering my questions 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 other.
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?
Meanwhile, I feel like I will continue to enjoy "summer vacation"... ad infinitum.