Preparing for RMD from TSP
Preparing for RMD from TSP
Suppose you are a former federal employee with a TSP account. You are not currently taking any money from the TSP account and you still have your one time partial withdrawal available. You are a few years from RMDs and you want the RMDs to go smoothly. From another thread, it seems there are ways that things might not go so smoothly sometimes. I'm making this a separate thread because I suspect the answer will not apply to that thread (I think it is too late).
Assume your birthday is in March and you'll be 70.5 in September 2015. How would you go about setting things up for the easiest transition?
Just because I'm ignorant, are you supposed to take the first RMD in the year in which you turn 70.5? I know there is a deadline in April the next year, I'm just not sure when the first RMD is due and when it is overdue but still payable without penalty.
I also don't know when you get your first notice from the TSP that an RMD will be due. If anyone knows that, it would be helpful. I'm beginning to suspect that you get the notice after the best time to set things in motion....the reason for this thread.
Assume your birthday is in March and you'll be 70.5 in September 2015. How would you go about setting things up for the easiest transition?
Just because I'm ignorant, are you supposed to take the first RMD in the year in which you turn 70.5? I know there is a deadline in April the next year, I'm just not sure when the first RMD is due and when it is overdue but still payable without penalty.
I also don't know when you get your first notice from the TSP that an RMD will be due. If anyone knows that, it would be helpful. I'm beginning to suspect that you get the notice after the best time to set things in motion....the reason for this thread.
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Re: Preparing for RMD from TSP
I don't think I ever got anything from TSP notifying me about the RMD. I did from Vanguard.
Re: Preparing for RMD from TSP
For the one you got from Vanguard, did you get it early enough to take the RMD in the year you actually turned 70.5? Or in time to take it the following April?
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Re: Preparing for RMD from TSP
I got it plenty early, Vanguard is on the ball with RMDs.
Your have until 4/15 after age 70.5 to make your first RMD. I chose not to wait because that would put 2 RMDs into that same calender year.
Your have until 4/15 after age 70.5 to make your first RMD. I chose not to wait because that would put 2 RMDs into that same calender year.
Re: Preparing for RMD from TSP
This is funny. I moved over to this thread so my question wouldn't hijack your thread.....and yet you and I are the only ones talking!
I'm guessing the smoothest way to do this is to start monthly payments, based on the life expectancy option, in the year you turn 69.5. Maybe late in the year, like November. Then it will already be in place for the year you turn 70.5 and the TSP will always calculate it for you and you don't have to worry about it.
It seems if you wait till during the year you turn 70.5 to start the monthly payments based on life expectancy, it may be too late to get it all in by December. But one poster did say they will make an adjustment in December if needed. I also read that in a FEDweek publication, but I'd like to see that in a TSP publication before I depend on it.
I'm guessing the smoothest way to do this is to start monthly payments, based on the life expectancy option, in the year you turn 69.5. Maybe late in the year, like November. Then it will already be in place for the year you turn 70.5 and the TSP will always calculate it for you and you don't have to worry about it.
It seems if you wait till during the year you turn 70.5 to start the monthly payments based on life expectancy, it may be too late to get it all in by December. But one poster did say they will make an adjustment in December if needed. I also read that in a FEDweek publication, but I'd like to see that in a TSP publication before I depend on it.
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Re: Preparing for RMD from TSP
Message deleted.
Last edited by Sam I Am on Sun Oct 06, 2013 1:02 pm, edited 1 time in total.
Re: Preparing for RMD from TSP
I am monitoring this thread but I don't have anything to contribute. I hope by the time I need RMDs, all issues will be resolved.retiredjg wrote:This is funny. I moved over to this thread so my question wouldn't hijack your thread.....and yet you and I are the only ones talking!
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Re: Preparing for RMD from TSP
Tee hee. I hope not to need the information for beneficiaries. Although I should print it out and put it in my "Nephew, start here to take care of my stuff" file.
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Re: Preparing for RMD from TSP
As noted in the TSP link above, they will make up any shortage in the RMD. You can delay the first RMD until the year after you turn 70.5, but I chose not to do that since I intend to work the full year in 2014 and I do not want to increase my taxes by having two TSP RMDs in one year on top of my salary and civil service retirement and another RMD.
Re: Preparing for RMD from TSP
TSP-70 Request for Full Withdrawal contains some good information. Section IV, #23 select c. - 100% TSP Monthly Payments and check the box "Compute my payments based on my life expectancy".
Per the instructions
"If you choose to have the TSP compute your payments, we will use the IRS Single Life Table, Treas. Reg. 1.401(a)(9)-9, Q&A 1
(for participants who are under age 70 after June 30 of the calendar year when payments are calculated) or the Uniform Lifetime
Table, Treas. Reg. 1.401(a)(9)-9, Q&A 2 (for participants who turn age 70 before July 1 of that year)."
Based on that if you wait until the year you turn 70.5 your payments will based on the Uniform Lifetime Table to satisfy the RMD. I would think doing so in January of that year would be best also as I don't know how it would work if you waited until late in the year. Once things start it should be auto pilot from there.
I still have about 14 years to figure this all out!
Per the instructions
"If you choose to have the TSP compute your payments, we will use the IRS Single Life Table, Treas. Reg. 1.401(a)(9)-9, Q&A 1
(for participants who are under age 70 after June 30 of the calendar year when payments are calculated) or the Uniform Lifetime
Table, Treas. Reg. 1.401(a)(9)-9, Q&A 2 (for participants who turn age 70 before July 1 of that year)."
Based on that if you wait until the year you turn 70.5 your payments will based on the Uniform Lifetime Table to satisfy the RMD. I would think doing so in January of that year would be best also as I don't know how it would work if you waited until late in the year. Once things start it should be auto pilot from there.
I still have about 14 years to figure this all out!
Re: Preparing for RMD from TSP
TSP did send me a letter a few months before the year I turned RMD age.
October? November? Of course, at that point the exact monthly payment can't be determined. If I remember correctly, they also included the Forms and the Withdrawal booklet.
Plenty of time to get the needed (In my case) spousal signature and notarization.
Also, since the 1st payment doesn't go until the end of the month, I had about 3 weeks in January to submit the forms.
All in all, a very easy transaction.
October? November? Of course, at that point the exact monthly payment can't be determined. If I remember correctly, they also included the Forms and the Withdrawal booklet.
Plenty of time to get the needed (In my case) spousal signature and notarization.
Also, since the 1st payment doesn't go until the end of the month, I had about 3 weeks in January to submit the forms.
All in all, a very easy transaction.