TSP RMD - first time

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Topic Author
Loon11
Posts: 349
Joined: Wed Feb 29, 2012 6:07 pm

TSP RMD - first time

Post by Loon11 »

Hello Bogleheads. I am reaching age 72 in March of 2022 and will need to take RMDs. I am sure others have already done this so I need to clarify the process. Tried to do it online today (its Sat) and could not do it. What I'd like to do is schedule quarterly payments based on life expectancy (which I calculate based on Dec. 31 and 27.4) to be $27927).
I asked for partial withdrawal and quarterly but looks like tsp is using current balance rather than Dec. 31 balance. Also, I wanted to put in a hefty fed tax payment of around $2200 (which I planned to use as my usual quarterly tax payment). TSP would not let me put any additional amount of tax into the box - only married status.
Also, I cannot understand why I would need to get a notarized form by spouse since this is a RMD. It is not optional. If I don't do it, they will send me a check anyway at the end of the year without my spouse's signature. This doesn't make sense to require a trip to the bank for something that is required by law. I can try to reach them by phone next week but wanted to start this before tax time.
Anyone else have similar issues?
Swimmer
Posts: 623
Joined: Tue Dec 29, 2015 4:24 pm

Re: TSP RMD - first time

Post by Swimmer »

Loon11 wrote: Sat Jan 08, 2022 1:46 pm Hello Bogleheads. I am reaching age 72 in March of 2022 and will need to take RMDs. I am sure others have already done this so I need to clarify the process. Tried to do it online today (its Sat) and could not do it. What I'd like to do is schedule quarterly payments based on life expectancy (which I calculate based on Dec. 31 and 27.4) to be $27927).
I asked for partial withdrawal and quarterly but looks like tsp is using current balance rather than Dec. 31 balance. Also, I wanted to put in a hefty fed tax payment of around $2200 (which I planned to use as my usual quarterly tax payment). TSP would not let me put any additional amount of tax into the box - only married status.
Also, I cannot understand why I would need to get a notarized form by spouse since this is a RMD. It is not optional. If I don't do it, they will send me a check anyway at the end of the year without my spouse's signature. This doesn't make sense to require a trip to the bank for something that is required by law. I can try to reach them by phone next week but wanted to start this before tax time.
Anyone else have similar issues?

With respect to your last paragraph, I had the same experience in scheduling my first RMD from my TIAA 403(b). That doesn’t make sense at all. What if spouse had refused to sign?
trueblueky
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Joined: Tue May 27, 2014 3:50 pm

Re: TSP RMD - first time

Post by trueblueky »

Loon11 wrote: Sat Jan 08, 2022 1:46 pm Hello Bogleheads. I am reaching age 72 in March of 2022 and will need to take RMDs. I am sure others have already done this so I need to clarify the process. Tried to do it online today (its Sat) and could not do it. What I'd like to do is schedule quarterly payments based on life expectancy (which I calculate based on Dec. 31 and 27.4) to be $27927).
I asked for partial withdrawal and quarterly but looks like tsp is using current balance rather than Dec. 31 balance. Also, I wanted to put in a hefty fed tax payment of around $2200 (which I planned to use as my usual quarterly tax payment). TSP would not let me put any additional amount of tax into the box - only married status.
Also, I cannot understand why I would need to get a notarized form by spouse since this is a RMD. It is not optional. If I don't do it, they will send me a check anyway at the end of the year without my spouse's signature. This doesn't make sense to require a trip to the bank for something that is required by law. I can try to reach them by phone next week but wanted to start this before tax time.
Anyone else have similar issues?
The spousal signature was part of the FERS legislation in 1986.
Spouses of CSRS employees/annuitants do not sign. They receive notification.
chemocean
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Re: TSP RMD - first time

Post by chemocean »

TSP is an 401K -like retirement plan that is covered under ERISA.
With IRAs, spouses have no rights.
Under ERISA, spouses have rights.
With your notarized signature, you certifying that you have informed you spouse of your withdrawal.
Luckily, one of banks for which I signed up for a bonus has a brick-and-mortar branch nearby at which I can get the TSP form notarized.
chemocean
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Re: TSP RMD - first time

Post by chemocean »

trueblueky wrote: Sat Jan 08, 2022 4:15 pm
Loon11 wrote: Sat Jan 08, 2022 1:46 pm Hello Bogleheads. I am reaching age 72 in March of 2022 and will need to take RMDs. I am sure others have already done this so I need to clarify the process. Tried to do it online today (its Sat) and could not do it. What I'd like to do is schedule quarterly payments based on life expectancy (which I calculate based on Dec. 31 and 27.4) to be $27927).
I asked for partial withdrawal and quarterly but looks like tsp is using current balance rather than Dec. 31 balance. Also, I wanted to put in a hefty fed tax payment of around $2200 (which I planned to use as my usual quarterly tax payment). TSP would not let me put any additional amount of tax into the box - only married status.
Also, I cannot understand why I would need to get a notarized form by spouse since this is a RMD. It is not optional. If I don't do it, they will send me a check anyway at the end of the year without my spouse's signature. This doesn't make sense to require a trip to the bank for something that is required by law. I can try to reach them by phone next week but wanted to start this before tax time.
Anyone else have similar issues?
The spousal signature was part of the FERS legislation in 1986.
Spouses of CSRS employees/annuitants do not sign. They receive notification.
But the CSRS retiree still needs to sign with notary to certify that they have notified their spouse. I have had sign the notarized form (online form TSP-99, top of page 3) every time I make a partial withdrawal as a CSRS annuitant. I don't know the rules for FERS.
Topic Author
Loon11
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Re: TSP RMD - first time

Post by Loon11 »

from what I am reading, looks like I am going to have to get a notarized form signed. I am still going to call them because if I want a quarterly withdrawal, looks like I would need a new notarized form each time (and every year) which is crazy.
I do have a bank nearby but it is inconvenient and if they require this each time, I will transfer it out to a vanguard IRA for simplicity. maybe leave a few thousand in G fund and let them send me a check at the end of the year, although I am not certain if they would wait til 2023, the deadline for first RMD

Thanks for your responses.
chemocean
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Re: TSP RMD - first time

Post by chemocean »

I don't know what the options for signing up for the installment plan after retirement under the new rules. I know the rules have changed that now you can choice installment plans on a monthly basis, a quarterly basis or a yearly basis. I think selection and changes to this option also requires a notary signature.

the newest rules (2021) are located at:
https://www.tsp.gov/publications/tspbk30.pdf

When I retired, I chose the monthly installment plan with the minimum ($25) amount for flexibility. With the new rules, I changed to a yearly distribution under the new rules, which reduced my yearly withdrawal from $25 to $300.

One year, I tried doing monthly in-kind transfers from TSP to Vanguard by changing the amount and destination of the funds. After the first monthly installment, Vanguard kept putting the check from TSP into the wrong account. I guess Vanguard's internal notes are not designed for multiple year-long processes. So now when I want to initiate direct transfers from TSP to Vanguard, I do single transfers. Unfortunately, the process is tedious. You first fill out the form on line and 1) print it, 2) get it notarized, and 3) then send form to the receiving financial institution, who signs their acceptance of the transfer, 4) they send it back to you, and then 5) you submit the signed package to TSP.

I mention this tedious timeline, because this is the same timeline required of non-spousal beneficiaries of the ORIGINAL OWNER to transfer their death benefits to a non-spousal inherited IRA or they will receive the balance of your TSP as a taxable cash payment in a single tax year.
NOTE that non-spousal beneficiaries of the SPOUSAL TSP MUST receive their benefits as a taxable cash payment in a single tax year. (tspbk32)
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pahkcah
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Re: TSP RMD - first time

Post by pahkcah »

chemocean wrote: Sat Jan 08, 2022 6:22 pm
trueblueky wrote: Sat Jan 08, 2022 4:15 pm
Loon11 wrote: Sat Jan 08, 2022 1:46 pm Hello Bogleheads. I am reaching age 72 in March of 2022 and will need to take RMDs. I am sure others have already done this so I need to clarify the process. Tried to do it online today (its Sat) and could not do it. What I'd like to do is schedule quarterly payments based on life expectancy (which I calculate based on Dec. 31 and 27.4) to be $27927).
I asked for partial withdrawal and quarterly but looks like tsp is using current balance rather than Dec. 31 balance. Also, I wanted to put in a hefty fed tax payment of around $2200 (which I planned to use as my usual quarterly tax payment). TSP would not let me put any additional amount of tax into the box - only married status.
Also, I cannot understand why I would need to get a notarized form by spouse since this is a RMD. It is not optional. If I don't do it, they will send me a check anyway at the end of the year without my spouse's signature. This doesn't make sense to require a trip to the bank for something that is required by law. I can try to reach them by phone next week but wanted to start this before tax time.
Anyone else have similar issues?
The spousal signature was part of the FERS legislation in 1986.
Spouses of CSRS employees/annuitants do not sign. They receive notification.
But the CSRS retiree still needs to sign with notary to certify that they have notified their spouse. I have had sign the notarized form (online form TSP-99, top of page 3) every time I make a partial withdrawal as a CSRS annuitant. I don't know the rules for FERS.
Unless Federal law recently changed, CSRS retirees are only required to provide an address for the spouse. The TSP people perform the spousal notification. Per the law (posted below) - "The participant must provide the TSP record keeper with the spouse's correct address."

Per the Thrift Savings Plan administrators (https://www.tsp.gov/publications/tspbk02.pdf) -
"If you are a married CSRS participant with a total TSP account balance of more than $3,500, we must notify your spouse of your withdrawal. This is also true if you request a change in the amount or frequency of installment payments since this could affect the amount available for an annuity."

And, here is the Federal law that covers this:

Subpart G—Spousal Rights
§ 1650.61 Spousal rights applicable to post-employment withdrawals.
(a) The spousal rights described in this section apply to full post-employment withdrawals when the married participant's vested TSP account balance exceeds $3,500, and to partial post-employment withdrawals without regard to the amount of the participant's account balance.
(b) The spouse of a CSRS participant is entitled to notice when the participant applies for a post-employment withdrawal, unless the participant was granted an exception under this subpart to the spousal notification requirement within 90 days of the date the withdrawal request is processed by the TSP. The participant must provide the TSP record keeper with the spouse's correct address. The TSP record keeper will send the required notice by first class mail to the spouse at the most recent address provided by the participant.
Topic Author
Loon11
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Re: TSP RMD - first time

Post by Loon11 »

I see I am not alone with dealing with the tsp complexities. Will try to sort it out this week and if it is a continual struggle, will likely transfer out, keeping a minimum in G fund.
rkhusky
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Re: TSP RMD - first time

Post by rkhusky »

Loon11 wrote: Sun Jan 09, 2022 12:35 pm I see I am not alone with dealing with the tsp complexities. Will try to sort it out this week and if it is a continual struggle, will likely transfer out, keeping a minimum in G fund.
You could transfer just 5 years worth out at a time. I figure I can handle a hassle every 5 years. Plus have the hope that things might change in 5 years.
quietseas
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Re: TSP RMD - first time

Post by quietseas »

Although the G Fund may be headed into a "more favorable" economic cycle than the last decade where it often you would have done better in long term CDs, I'm still not sure TSP is worth the hassle once RMDs start. If you expect to leave the TSP account to your heirs I'd roll it into an IRA anyways so your spouse and other heirs don't need to worry about the peculiarities of the TSP. Also, you may want to do Qualified Charitable Distributions (QCDs) which are easy to do at a major brokerage out of a Traditional IRA.
Topic Author
Loon11
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Re: TSP RMD - first time

Post by Loon11 »

Thanks quietseas, I agree. Spent one hr on phone with tsp - the rep did not even know about the change in the mortality tables - tried to tell me my RMD was about $2k higher than it is. Plus she was not able to fix the problem with indicating the amount of fed tax to take out. she ended up saying the best way to do it would be to send me all the paperwork by mail and then fax or upload it when completed. Unable to do it online!
Topic Author
Loon11
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Re: TSP RMD - first time

Post by Loon11 »

Thanks quietseas, I agree. Spent one hr on phone with tsp - the rep did not even know about the change in the mortality tables - tried to tell me my RMD was about $2k higher than it is. Plus she was not able to fix the problem with indicating the amount of fed tax to take out. she ended up saying the best way to do it would be to send me all the paperwork by mail and then fax or upload it when completed. Unable to do it online!
Swimmer
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Re: TSP RMD - first time

Post by Swimmer »

Loon11 wrote: Thu Jan 13, 2022 12:35 pm Thanks quietseas, I agree. Spent one hr on phone with tsp - the rep did not even know about the change in the mortality tables - tried to tell me my RMD was about $2k higher than it is. Plus she was not able to fix the problem with indicating the amount of fed tax to take out. she ended up saying the best way to do it would be to send me all the paperwork by mail and then fax or upload it when completed. Unable to do it online!

Scary. I retired from the Federal government ten years ago. Looking down the road, I anticipated problems with RMDs, etc. I rolled everything out, not only to simplify, but to avoid issues such as this.
HeelaMonster
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Re: TSP RMD - first time

Post by HeelaMonster »

quietseas wrote: Sun Jan 09, 2022 3:36 pm Although the G Fund may be headed into a "more favorable" economic cycle than the last decade where it often you would have done better in long term CDs, I'm still not sure TSP is worth the hassle once RMDs start. If you expect to leave the TSP account to your heirs I'd roll it into an IRA anyways so your spouse and other heirs don't need to worry about the peculiarities of the TSP. Also, you may want to do Qualified Charitable Distributions (QCDs) which are easy to do at a major brokerage out of a Traditional IRA.
Yep. I frequently see "access to the G Fund" cited as the reason to stay in TSP. It may be better than 0.5% in a bank account, but I don't think that's the alternative most people are weighing against(?). G Fund hasn't kept pace with inflation for the past decade, and isn't enough to keep me around, now that I am entering decumulation phase (even if it weren't for the challenges of withdrawal, aforementioned "peculiarities" that would penalize heirs, etc). Average annual returns:

1 yr 1.38%
3 yr 1.53%
5 yr 1.96%
10 yr 1.93%
Alan S.
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Re: TSP RMD - first time

Post by Alan S. »

In addition, if I recall correctly TSP procedures do not include the use of Table II (Joint Life) should you have a sole spousal beneficiary of your TSP who is more than 10 years younger than yourself. This would result in a distribution larger than the statutory RMD rules provide.

If the TSP has not changed this, and you receive an RMD larger than the statutory RMD, you can roll over the excess amount because that excess distribution is not treated as a statutory RMD.
MichDad
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Re: TSP RMD - first time

Post by MichDad »

I've said it before. I'll say it again.

The TSP is very good during the accumulation stage. It's not so good during the decumulation stage (i.e., retirement). Yes, I continue to maintain a large G Fund balance in retirement. It's a good but not terrific fund to use as the bond portion of our retirement portfolio. If my wife or I develop cognitive or mobility issues that make it difficult for us to visit a notary, I'll probably close my TSP account and transfer my G Fund assets into an IRA at Schwab or Merrill Edge.

MichDad
Old Guy
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Re: TSP RMD - first time

Post by Old Guy »

I moved my TSP over to Fidelity as part of combining the number accounts I had and because of the inheritance issue. I take my RMDs on a monthly basis.
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Jerry55
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Re: TSP RMD - first time

Post by Jerry55 »

*** Watching ***

I'm single, 3 children and looking into them making an Inherited IRA at Vanguard, Fidelity or T Rowe where they save.
I'm asking the time limitation of them doing the paperwork coz they're all out of state, asking

"If they don't file within 14-30 days, will checks be sent out and taxed, regardless ? "

They keep referring me to a booklet that only mentions they'll send it out within 90 days.

A Simple YES or NO would suffice, but....Noooooooooooo, that's too easy !

Y'all are giving me great ideas into moving it to not deal with this mess. I still have 5 years before RMD's.

Good Luck OP !
Retired CSRS on 12/19/2012 @ age 57 w/39 years | Good Bye Tension, Hello Pension !!!
Topic Author
Loon11
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Re: TSP RMD - first time

Post by Loon11 »

Im seriously considering moving the whole t hing over but now I need to decide where to put it. I have most in the L Income fund but about 15-20% mixed between the C, G and other two (none in F fund).
Would a target retirement be the goal? want to simplify. Or better to split it into the recommended 3 fund. If I keep an amt of G, that could suffice for the bond portion. I will have about $750K after the RMD.

might be easiest to just transfer it all now. They will take out the RMD first and withhold some amt of tax. That would preclude having to get the notarized form would't it? A work-around in a sense.
MichDad
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Re: TSP RMD - first time

Post by MichDad »

Loon11 wrote: Fri Jan 14, 2022 11:13 am Im seriously considering moving the whole t hing over but now I need to decide where to put it. I have most in the L Income fund but about 15-20% mixed between the C, G and other two (none in F fund).
Would a target retirement be the goal? want to simplify. Or better to split it into the recommended 3 fund. If I keep an amt of G, that could suffice for the bond portion. I will have about $750K after the RMD.

might be easiest to just transfer it all now. They will take out the RMD first and withhold some amt of tax. That would preclude having to get the notarized form would't it? A work-around in a sense.
The TSP I Fund's coverage is not ideal. It doesn't include emerging markets, small/mid cap international companies in developed markets, or any Canadian companies. Efforts to fix this have been stalled for years by the Federal Retirement Thrift Investment Board, with no end in sight. Instead of the I Fund, take a look at Vanguard's VXUS fund. You don't have to purchase Vanguard funds at Vanguard. You can purchase them at Schwab, Merrill Edge, and elsewhere. I've experienced only excellent customer service at Schwab.

Before you move your assets to Schwab, Merrill Edge, or elsewhere, be sure to check whether you can receive a transfer bonus. During the first two years of our retirement, my wife and I have received, in combination, about $8,000 in transfer bonuses. They're especially lucrative when deposited directly into Roth accounts as there are no resulting income taxes.

MichDad
Topic Author
Loon11
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Re: TSP RMD - first time

Post by Loon11 »

great advise Michdad! My spouse has an acct at Schwab, so not sure if they would offer a bonus but will sure check. Ihave fidelity but not merrill.
will look into it.
Just realized that if I let tsp send me my rmd, they won't until next april so can't get around the notarized form. Not a big issue but so far, tsp has not been helpful overall and want to preclude this again.
BruinBones
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Re: TSP RMD - first time

Post by BruinBones »

MichDad wrote: Fri Jan 14, 2022 11:50 am
The TSP I Fund's coverage is not ideal. It doesn't include emerging markets, small/mid cap international companies in developed markets, or any Canadian companies. Efforts to fix this have been stalled for years by the Federal Retirement Thrift Investment Board, with no end in sight. Instead of the I Fund, take a look at Vanguard's VXUS fund. You don't have to purchase Vanguard funds at Vanguard. You can purchase them at Schwab, Merrill Edge, and elsewhere. I've experienced only excellent customer service at Schwab.

Before you move your assets to Schwab, Merrill Edge, or elsewhere, be sure to check whether you can receive a transfer bonus. During the first two years of our retirement, my wife and I have received, in combination, about $8,000 in transfer bonuses. They're especially lucrative when deposited directly into Roth accounts as there are no resulting income taxes.

MichDad
I've often heard the exclusion of emerging markets, small/midcap international, and Canadian companies as a weakness in using TSP-I fund as your only international allocation. However, I look at it as analogous to an S&P 500 index fund (like VFIAX) vs a Total Stock Market index fund (VTSAX), for which long-term correlation is high. The Vanguard analog to the TSP I-fund, according to Morningstar, of Vanguard Developed Markets Index Admiral Shares (VTMGX) shows good correlation (and even slightly higher returns) with Vanguard Total International Stock Index Fund ETF Shares (VXUS) over 1-year (5.4% vs 3.9%) 2-year (15.07% vs 13.14%), 5-year (35.94% vs 34.85%), and 10-year (59.17% vs 47.38%) periods.
michaelingp
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Re: TSP RMD - first time

Post by michaelingp »

HeelaMonster wrote: Thu Jan 13, 2022 4:53 pm

Yep. I frequently see "access to the G Fund" cited as the reason to stay in TSP. It may be better than 0.5% in a bank account, but I don't think that's the alternative most people are weighing against(?). G Fund hasn't kept pace with inflation for the past decade, and isn't enough to keep me around, now that I am entering decumulation phase (even if it weren't for the challenges of withdrawal, aforementioned "peculiarities" that would penalize heirs, etc). Average annual returns:
I'm in the same boat, keeping money in TSP, all in G Fund, but closing in on RMD age. If I rollover entire sum to IRA, what do I invest in? I see another thread recommending TIPs (VAIPX).
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Jerry55
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Re: TSP RMD - first time

Post by Jerry55 »

michaelingp wrote: Fri Jan 14, 2022 8:27 pm I'm in the same boat, keeping money in TSP, all in G Fund, but closing in on RMD age. If I rollover entire sum to IRA, what do I invest in? I see another thread recommending TIPs (VAIPX).
There's nothing like the G fund anywhere, and I'll start there.
Depending on your Risk Tolerance and financial circumstances, I'd suggest a Moderate to Conservative portfolio, of 60/40, 50/50 or 40/60.
My reasoning is that you'll need some growth over your expected lifetime and not wallow in 1-2% returns, but, if you'd be happy with that, I dunno.

I'm 4 years from RMD, and am still, (since 2009) 80/10/10 in C/S/I funds, however I'm CSRS with a good pension after 39 years.
If I DO move, it'll be one of the percentages I've mentioned above...who knows. Certainly will not be all G fund for sure.

Many Conservative or Moderate funds out there, I also have Wellington (taxable) and Wellesley (Roth IRA) in Vanguard, but that's just me.

Keep us informed and good luck.
Retired CSRS on 12/19/2012 @ age 57 w/39 years | Good Bye Tension, Hello Pension !!!
Topic Author
Loon11
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Re: TSP RMD - first time

Post by Loon11 »

Congrats Jerry55 on being a CSRS pensioner! I do have Wellington in my Vanguard Roth - its done very well so that would be an OK choice. Still looking into Schwab for the bonus or just holding off this year. No way around the forms so may continue to look into options leisurely.
I've always heard to never completely close the tsp so its a decision I don't want to rush into, although this RMD is a task.

Also, I still want to do Roth transfers in the future if I can stay under the cliff. Did the last two years before upcoming RMD and it took at least
4-6 weeks for completion. again, getting notarized form signed, sending package to vanguard, crossing fingers that Vanguard gets it back to TSP, etc.
It's a process that has to be followed closely - Vanguard the first time did not send the forms to TSP and there was a huge delay. It would be really nice to be able to do it smoothly at one Broker less all the steps.
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