The TSP has expanded on guidance it issued earlier on the suspension for this year of the “required minimum withdrawal” requirement for retired account holders who are age 72 and above.
That requirement does not apply this year because of a provision in one of the Coronavirus relief bills. In earlier guidance the TSP had said it will not send automatic RMD payments for 2020 to those who had not designated a withdrawal.
It also said that if an account holder does make a withdrawal, the TSP will withhold for federal taxes at the regular rate and that those withdrawals could be transferred to an IRA or other eligible retirement savings plan.
The new guidance adds that:
• “RMDs are waived for 2020, which means they are effectively canceled. You do not have to receive two RMDs in 2021. This is true even if 2020 is your first RMD year and, therefore, not required until April 1, 2021. If 2020 is your first RMD year, the first RMD you have to take will be for your second RMD year (2021) and is due December 31, 2021.”
• “The temporary waiver of RMDs does not stop installment payments you have elected to take, even if you only chose to take them to meet your RMD. If you want to stop receiving payments, you must log in to My Account on tsp.gov and select Withdrawals and Changes to Installment Payments.”
• Installment payments based on life expectancy, even if structured to meet the RMD requirement, cannot be temporarily suspended and then resumed. They can only be stopped, and if stopped cannot be restarted.
• RMDs already taken can be redeposited to TSP accounts within 60 days of the withdrawal, using form TSP-60. The IRS may allow for redeposits after longer periods but there has been no guidance on that to date.
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