I teach at ETAPs (Executive Transition Assistance Program). I used to say that when you wanted to start taking money out of TSP, it was time to move your money to an IRA. The options available weren't flexible enough. I no longer say that, as now the options are flexible (as of September 16th, 2019).
TSP Withdrawal Options Now On Par with Corporate Retirement Plans
I won't waste your time with what the options used to be. I'll just talk about what you can do now.
You can now make multiple partial withdrawals from TSP after you separate from service (taxes and penalties could apply if the withdrawals aren't "qualified" in the eyes of the IRS). You are limited to one every 30 calendar days.
If you're still working for the government after age 59 1/2 you can take up to 4 distributions per year. If you're a government civilian employee and also have a military TSP account this would apply to the civilian TSP only (by my interpretation). This could be a reason to keep your TSP accounts separate.
This one is a biggy. You can chose whether the withdrawal will come from your Roth balance, if you have one, or your pre-tax balance. This allows for much better control of your tax bill in retirement.
Missing an RMD won't trigger an automatic full withdrawal.
You can make changes at any time.
You can receive recurring distributions monthly, quarterly or annually.
Overall, I'm really happy with these changes. This makes TSP a much better option for the distribution phase of your life. There are still some estate planning issues that I don't like. You can find out about them in the article linked below.
Keeping up with all the changes that affect your military benefits and the rest of your financial life can be tough. If you'd like some help, let us know.
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