SnowballCamper
Full time employment: Posting here.
- Joined
- Aug 17, 2019
- Messages
- 691
We're about to make a big commitment, and start SEPP withdrawals from my TSP, beginning in 2022. The main reason is to level our income stream over the retirement years, and second to access the funds for hobbies and interests while we're more mobile than we'll likely be in the future. A while ago I posted here https://www.early-retirement.org/forums/f28/thrift-savings-plan-withdrawals-99511.html, and have since read a lot about rollovers, and just recently found this wonderful paper about setting up a SEPP https://72tnet.com/wp-content/uploa...-To-SEPPS-and-IRC-72t-Bill-Stecker-4th-ed.pdf.
Here are the basic stats:
Ages 47 & 50
Military pension income ~86k
Roth IRA combined ~300k
TSPs: ~350k+~550k
ESA and 529: ~80k
Cash: ~40k
I closed our brokerage when retiring a few years ago and paying off the house. I'll be opening a new one for the SEPP payments to go in (while we decide what to spend them on).
Current expenses easily met by pension income, and no debt.
For our situation, modeling Roth conversions with I-orp yielded very little advantage (at most $1,000 per year advantage). Keep in mind that I-orp computes the maximum average annual income after taxes. So if the goal was to maximize total $$ for the lifetime, then I, and most people, should do the Roth conversion before RMDs. But as my tag line says.... When does it stop making sense to spend less now, in order to have more later? And for us the answer is, next year.
I'm going ahead with the option to include my Roth balance in the SEPP plan. This will allow for a larger annual withdrawal amount. But my withdrawals will only come from the TSP.
For simplicity, I'm not doing the annual recalculation method.
How does the SEPP level our income? It only partially offsets the increases when SS starts and at RMD time. Once I turn 60, we'll have the option to stop/change the withdrawals.
Why wait till next year? It appears the mortality tables for the withdrawal calculation are set to change early next year. I plan to do quarterly payments, and will rebalance within the TSP at about the same time as the payments.
Why aren't you both doing a SEPP? Good question...DW isn't interested, has cheaper hobbies, :shrug:
At this point I don't have a question. I spent a lot of searching online to find some info specific to a SEPP with the TSP and just recently found William Stecker's book (linked above). While it is a bit old, the main reference he uses is still current on the IRS website. His book doesn't mention the TSP at all, but since the TSP relaxed their withdrawal rules a year or so ago, it's easy to follow his guidance & recommendations.
I'll answer any questions, and post progress updates through the process next year.
Here are the basic stats:
Ages 47 & 50
Military pension income ~86k
Roth IRA combined ~300k
TSPs: ~350k+~550k
ESA and 529: ~80k
Cash: ~40k
I closed our brokerage when retiring a few years ago and paying off the house. I'll be opening a new one for the SEPP payments to go in (while we decide what to spend them on).
Current expenses easily met by pension income, and no debt.
For our situation, modeling Roth conversions with I-orp yielded very little advantage (at most $1,000 per year advantage). Keep in mind that I-orp computes the maximum average annual income after taxes. So if the goal was to maximize total $$ for the lifetime, then I, and most people, should do the Roth conversion before RMDs. But as my tag line says.... When does it stop making sense to spend less now, in order to have more later? And for us the answer is, next year.
I'm going ahead with the option to include my Roth balance in the SEPP plan. This will allow for a larger annual withdrawal amount. But my withdrawals will only come from the TSP.
For simplicity, I'm not doing the annual recalculation method.
How does the SEPP level our income? It only partially offsets the increases when SS starts and at RMD time. Once I turn 60, we'll have the option to stop/change the withdrawals.
Why wait till next year? It appears the mortality tables for the withdrawal calculation are set to change early next year. I plan to do quarterly payments, and will rebalance within the TSP at about the same time as the payments.
Why aren't you both doing a SEPP? Good question...DW isn't interested, has cheaper hobbies, :shrug:
At this point I don't have a question. I spent a lot of searching online to find some info specific to a SEPP with the TSP and just recently found William Stecker's book (linked above). While it is a bit old, the main reference he uses is still current on the IRS website. His book doesn't mention the TSP at all, but since the TSP relaxed their withdrawal rules a year or so ago, it's easy to follow his guidance & recommendations.
I'll answer any questions, and post progress updates through the process next year.