John Grobe

When you reach the year in which you turn the age of 70 ½, you will be required to start taking money from the Thrift Savings Plan (both traditional and Roth) and from traditional Individual Retirement Arrangements (withdrawals are not required for Roth IRAs). These withdrawals are called required minimum distributions or RMDs. RMDs go all the way back to the introduction of the first IRA in 1974 and were instituted so that the government could get its hands on all that tax deferred money that is sitting, as yet untaxed, in retirement accounts.

The amount of your RMD is determined by the year-end balance of your account (for this year’s RMD, the December 31, 2018 balance would be used) and a distribution period based on the age that you turn this year. If you turn 70 ½ in May, you would turn 71 in November of this year and would use the distribution period for a 71 year old. On the other hand, if you didn’t turn 70 ½ until November, you would have turned 70 in May of this year and would use the distribution period for a 70 year old.

In IRS Publication 590B, Distributions from Individual Retirement Arrangements you will find three life expectancy tables. The table that is used most often is the Uniform Lifetime table. The other two are the Single table (which can be used by singles) and the Joint Life and Last Survivor table (which can used by those whose spouse in more than 10 years younger and is the sole beneficiary of the IRA or plan). The Thrift Savings Plan requires that all life expectancy based withdrawals (a category that includes RMDs) be calculated using the Uniform Lifetime table.

Let’s say that you had $500,000 in your TSP account on December 31, 2018 and you’ve turned 70 ½ in August of this year. You would use the distribution table for a 70 year old, as you turned the age of 70 this past February. The distribution period for a 70 year old on the Uniform Lifetime table is 27.4 years. You would divide $500,000 by 27.4 to get the amount of the RMD which is $18,249 (rounded up to the nearest dollar). If you’re taking your RMD in a single payment, you take one payment of $18,249. If you’re taking monthly payments, you divide the RMD amount by twelve to come up with a monthly amount of $1,521 (once again rounded up). Of course, if you’re taking monthly payments, you don’t have to do the math. The TSP has a withdrawal option where they will calculate your installment payments based on the Uniform Lifetime table.

RMDs are recalculated each year based on the age you turn in the year in question (one year older) and your new year-end balance.

You can delay your first RMD until April 1st of the year after the year in which you turn 70 ½, but all subsequent RMDs have to be taken by December 31st.