I’d like to make 1 or 2 small withdrawals per yr at or following govt retirement – maybe to pay-off car loans and make home improvements – then leave the TSP balance alone for awhile until i need to start making mandatory withdrawals. Are these small withdrawals even permitted and, if so, are there any frequency and amount limitations on these small withdrawals?
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<p>John,<br /> I read your response and while I understood what you said and agree with it mostly, there are a few issues where your response didn’t quite square with my understanding. If I’m wrong please correct me. The first issue is that once monies are rolled over to an IRA they are then subject to IRA rules and that means that any withdrawals before age 59.5 are subject to early withdrawal penalties. JohnnyC might not have reached that age even though he will have reached his minimum retirement age and will be eligible to take money from his TSP account without penalty when he retires. The second point is that it is my understanding that a TSP participant separating from service on an immediate annuity can request a one-time partial withdrawal from their TSP account as long as it is at least $1000. Further, this partial withdrawal does not have to be a rollover to an IRA. This can be done before the implementation of the TSP Modernization Act. Once the TSP Modernization Act is implemented further partial withdrawals will be permitted in accordance with whatever rules that the TSP office has adopted. Partial withdrawals that are not roll-overs are taxable and taxes will be withheld on the withdrawal. If JohnnyC is at least 59.5 he can take his partial withdrawal even before he separates from service. (Age related in-service withdrawal) In that case he would be better off to roll over enough for all of his partial withdrawals into an IRA and get a lot more flexibility. As a side note, my understanding is that such withdrawals from TSP accounts are not a speedy process, so that needs to be taken into consideration when planning such a withdrawal.<br /> Another John</p>
<p>Thank-you to ‘Another John’ in responding to my TSP withdrawal options question. I appreciate the clarification in his 1st point. In his 2nd point, I’m not sure i understand what “…separating from service on an immediate annuity…” means. Does this mean i need to initiate an annuity in order to qualify for the one-time partial withdrawal…prior to the TSP Modernization Act implementation. I didn’t want to start getting any scheduled payouts until later or when they automatically started at age 70.5yrs.<br /> thanks again,<br /> JohnnyC (age now is 55, MRA is 56 in Feb 2019; service time at MRA is 32yrs)</p>
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