And Feds (current or former) here in the TSP?

nikdfish · Aug 24, 2018

If you are not getting periodic payments, you probably can't get around the 20% with-holding for a payment straight to you. It is considered an eligible roll-over payment. My understanding is that you don't get to the 10% (or 0%) with-holding unless you either are setting up something with an annuity or a series of regular payments that are roughly aligned to the amount that would be consistent with their life-expectancy tables.

Not any kind of expert, I'm still letting my TSP ride after having made a one-time withdrawal a while back & not yet at the age 70 trigger point.

japody · Aug 24, 2018

Go to the TSP site and look for Pub TSP-536, Important Tax Information About Payments From Your TSP Account.
The last page is a chart that shows tax rates and also how to change it. In your case, use Form TSP-70.

HillStreet · Aug 24, 2018

If you are retired you can make one TSP change per year. With December right around the corner, read the TSP rules, or call somebody. Why not finance the tractor at zero percent, then have the TSP income pay it off. You want to avoid taxes? Tell us how that goes, we all want that. Of course it depends on income, you might actually pay zero, maybe 40 %— it depends.

Diggin It · Aug 24, 2018

TSP withdrawls will be changing in '19 to allow multiple partial withdrawls. You will also be able to change the monthly withdrawl amount at any time during the year instead of once in January. But none of that will help me until later in '19 when it takes effect.

Using TSP to make the payments is my plan, hopefully on a 0% loan, or near there. I hope to be able to set the monthly withdrawls to equal the loan payments, or be slightly higher. As it is now though, it would need to be 20% higher to allow for the IRS witholding. Even though I would get all or most of that 20% back the next February, I can't put it back in TSP. I'd rather take a smaller amount out, only what I need to cover the payments, and leave the rest in TSP to continue earning. But so far, I'm not seeing a way to do that effectively even though I've been ion a zero tax bracket for the last 6 years.

Diggin It · Aug 25, 2018

japody said:
Go to the TSP site and look for Pub TSP-536, Important Tax Information About Payments From Your TSP Account.
The last page is a chart that shows tax rates and also how to change it. In your case, use Form TSP-70.

If I'm reading that table right, it looks like I can reduce or eliminate the witholding if I select a monthly payment amount to be paid for 10 years or more.

"Monthly payments for 10 years or more (requested amount)
May I Decrease Withholding? Yes—complete the withholding section of your withdrawal request form.
May I Waive Withholding? Yes—complete the withholding section of your withdrawal request form."

Interesting. Need to do more reading.

chiefcook · Aug 25, 2018

I am of the age that requires me to take the minimum distribution. It goes to my credit union. It pays the tractor note and the rest goes to savings. No taxes are withheld.

Diggin It · Sep 1, 2018

Based on yesterday's closing, the balance has increased enough in less than the past two years to pay for a SCUT. The average monthly increase over that two years is at least 3 times what I estimate the monthly payment would be. I could pull an amount equal to the monthly payment and the account would still increase IF the market keeps on as it has. And that's something no one can forsee.

I've found out that I could pull that amount with no withholdings but I'm not sure what that would do to me the next filing year.

Diggin It · Sep 1, 2018

If I'm reading all this right, Uncle Sam could be buying my SCUT for me.

SS + a very small FERS pension payout (only had a few years in Federal employment) + Monthly payments from TSP would still fall into the 0 Tax bracket since SS is not taxed below a certain level. Those TSP payments would be enough to make the SCUT payment without affecting my SS or FERS and would still allow TSP to grow monthly as long as the market holds as it as been.

Is my head about to explode?