Ep #43: TSP Withdraw Plans

Full Episode Transcript
With Your Hosts
Micah Shilanski and Tammy Flanagan

Micah Shilanski:  Welcome back to the Plan Your Federal Retirement podcast. I’m your cohost, Micah Shilanski. And with me as usual is the amazing Tammy Flanagan. Happy new year, Tammy.

Tammy Flanagan:        Yeah. Happy new year to you too, Micah. I can’t believe we’re already in a new year.

Micah Shilanski:  I know it blows away. It’s kind of funny how, at the end of the year all these a million things are happening. It feels like our schedule gets so much tighter. We have these family commitments, we have the Christmas, the religious commitments, which are beautiful. Then you have all the stuff you still have to get done on your plate. And then it seems like the new year comes and now we have all year to worry about these things next. So all this much more time.

Tammy Flanagan:        And don’t forget the resolutions.

Micah Shilanski:  Oh, that’s right. Yes. All the new year’s resolutions.

Tammy Flanagan:        That’s right. All the one that we don’t keep.

Micah Shilanski:  Yeah. All the ones we don’t keep. Exactly. Which is not what we’re doing with this podcast. These are things that we want to make actionable. These things we want to make exciting for our listeners to take action on in their retirement. So these aren’t new year’s resolutions, but Tammy, you and I were chatting a little bit before. And this actually carried into a little bit of the end of 2021, where we were saying you know what, sometimes we get so caught up on end of the year stuff. These are things we should have taken care of sooner. These are things we should have done. And we both ran into a couple issues with the TSP on kind of last… I’m not going to say last minute planning, but end of year things that could come up with a problem with potential clients. And so we thought it’d be great to kickoff this year and say you know what, it’s January.

                           Why don’t we look at this and say, hey, we got 12 months in front of us. How do we get ahead of some things we need to plan for with the TSP? So not just focus on our distribution rules, but really focus on a turn of it and saying great, when is it the best time to think about doing some things. And of course we don’t give any recommendation. This is a general podcast, but if you were my client, this is when I’d want to start this conversation. This is when I’d want to start this process throughout the year. And these are some other things we can possibly wait until November, December with.

Tammy Flanagan:        Right. And I’m kind of guilty of this was my clients a little bit, because I always tell them, let’s focus on getting your FERS application in, let’s get everything done ahead of time. When it comes to your basic government pension, let’s not worry about the TSP because you can’t even really touch that money until about a month after you retire. But what I hear you saying, and what we’ve been talking about, which is really hit a nerve with me is that we really do need to start thinking about the plans for the TSP well, before we plan to retire, even though we may not implement that plan until we can. Until they open up that portal to take those distributions out of the TSP, but certainly makes sense to have a good plan in place.

Micah Shilanski:  Tammy, if I lived in my ideal world and I could pull my clients into this, we would be simulating retirement, living off retirement a year in advance. So a year before you retired. So what does that mean? That means your TSP would be set up for the distributions. If we need to do a transfer to an IRA would be done. Everything would be outlined, whatever income you’d be living on. You want X amount of dollars in retirement. Perfect. You’d be living on that. We’d actually adjust your pay so it can as close as we can simulate you being retired.

                           And that includes being ready to retire. Just what you said, making sure we have the FERS application. We have all this wonderful stuff in place and making sure your investments are outlined the way they need to be. Because we don’t know when the next 2008’s going to happen, but I do know it will happen. That was not a once in a lifetime event. We’re going to see something like that. Or a March of 2000 or December of 2018. Where the market was only down 30%. We’re going to see those types of things take place and you need to be prepared for them well in advance.

Tammy Flanagan:        Right. And being prepared doesn’t necessarily mean to take everything today and move it to the G fund. Because that’s how I find some of my clients tend to prepare is they’re thinking, okay, I’m going to retire. So that means get everything in my portfolio out of the stock market. It’s like, no, not exactly. And that’s when I send them to someone like you.

Micah Shilanski:  That’s right. That’s right. We got to have a blend. We got to have a strategy. So what I would love to do, Tammy, maybe we do it this way. A little bit different order. What do you think, we start off with a couple of snafus that we both ran into this last year with the TSP. And again, we’re not picking on the TSP. So hold down on sending us some hate mail on that one. We love the TSP, but we got to know its limitations. Just like with anything else, you got to know how it works well, and you got to know the parts that you have to plan around if you want a successful retirement. So we both ran into, Tammy ran into an interesting RMD thing and mine was a combination with kind of an RMD and a Roth conversion at the end of the year that kind of got messed up. And so some things we need to be proactive with. What do you think?

Tammy Flanagan:        Yeah. Sounds like a good plan to me.  You want to start first?

Micah Shilanski:  Yes. Let’s start with ladies first. Let’s start with yours.

Tammy Flanagan:        Well, this one was a situation where I think we’re going to see more and more of this as people are working later into life. Age 72 is not old anymore. This is an age where some people are still fully employed. They have no desire to retire right away. So I had a client who was going to work until he’s 85 and he decided to retire at the end of 2021. And because of his age, because he was over age 72, he had to take a required distribution. The question is, if you retire on December 31st, do you take it in 2021? Or can you wait until 2022 to take it?

                           So if you retire on the end of the year obviously there’s not much left in 2021 to take it, but does the IRS say that you still have to? And according to the TSP, they said that he is retired in 2021. They will initiate sending him that first required distribution. And I think they send it out sometime in March and that will count towards his 2021 RMD. So this gentleman was worried about that and he said, “Do you think I should postpone my retirement until January? And that means I forfeit my first FERS retirement check.” but I’m willing to do that because at age 85, based on the balance in his TSP account… Oops, I’m sorry. That meant that his required distribution was going to be $140,000.

Micah Shilanski:  And now just to catch us up here real fast because of when he was retired, he was already over 72 retiring at the end of the year. That would mean in the next year… So let’s put years on this. So he retired at 12/31, 2021, over 72. He has to take two RMDs next year because you got to take one before March to count for last year. And then you have to still take your 2022 RMD. So let’s just say they’re the same dollar amount. So he’d have to take out $280,000 from his TSP plus all of his extra income and pay taxes on it because of the date he chose to retire.

Tammy Flanagan:        Yeah. You think that might throw him into one of the higher tax brackets?

Micah Shilanski:  Oh my gosh. Because in order to have that much, I would imagine he has a long service history. So he probably has a decent pension may or may not have social security. That’s probably social security, probably social, it’s probably under FERS. So all of the sudden now you have a lot of income at 350, $400,000 in income. You got to pay a lot of taxes on that.

Tammy Flanagan:        Yeah. And I guess it’s true, the first RMD is the only one that you can really take in the next year. This next one that he has to take, which will be considered his second RMD has to come out by the end of December. So that’s the reason why we’re so concerned about having to take those two in the same tax year. So I guess one of the solutions would’ve been, this lends itself back to the pre-planning was because of his age, if you’re over 59 and a half, you can do an in-service withdrawal. So he could have taken his first RMD out in 2021, if he would’ve thought about this ahead of time, but in his case because he didn’t losing one retirement check, even if it’s $5,000 is probably worth it considering then he wouldn’t have to take two RMDs this year.

Micah Shilanski:  Oh, I’m just doing quick math because I like tax math. It’s fun. And I’m looking at a tax calculator. I mean, basically that potentially could have kept him going from a 24% to a 32% tax bracket. So that’s 8% more. So just taxes on $140,000. Again, this is quick math. What’s that $12,000 roughly in taxes, just federal income taxes that he would have to pay in addition, because of that two RMDs. So Tammy, to your point, he gives up one $5,000 check, but saves $12,000.

                           Now, if you don’t think that’s a good idea, send me $12,000 and I’ll send you $5,000. And you know what, I’m willing to make this for any one of our podcast listeners. I’m happy to do that. So of course that’s a joke. But that’s the power of some proper tax planning that we need to be thinking about.

Tammy Flanagan:        Yeah. If the numbers were smaller and if he was younger, I would’ve said, wait till the end of 2022 to retire. But hey, at 85 if he wants to retire today go ahead and retire.

Micah Shilanski:  Amen.

Tammy Flanagan:        At that point, take advantage of every opportunity.

Micah Shilanski:  Yeah, definitely a quality of life thing. Well, Tammy, the funny thing with this story too, is it kind of relates to mine. Because my story is about a 74, 75 year old. So kind of in the same case now he was under CSR and he wanted to retire on 12/31, 2020. Now this is the whole conversation we were having with him in the year of 2020 we’re saying, “Hey, we’re going to have to pull money out of your TSP early to satisfy the RMD.” Because we didn’t want to double up the RMDs. Well, low and behold, the Congress passed the law because of the pandemic. They waived RMD requirements. So he didn’t have to. And so now 2021 is coming around.

                           He didn’t want to move money out of his TSP because like many feds, he loves his TSP account and I’m like, “Hey, this is going to be a problem by the end of the year.” Especially with all of the things that happen at the end of the year. There’s holidays, people aren’t working. Things take longer in the financial service to actually process because you have a lot of people wanting to do things at the end of the year and you have limited staff and a lot of closed holidays.

                           And so this creates a bottleneck at the end of the year to get at things done. This is, again, it is kind of why we like planning earlier. And so we kind of waited to November to do his distribution and a really weird thing has happened to me that’s never happened to me before is Tammy when we went online to help him with his distribution, got everything set up, did the distribution had a confirmation it was coming out. Luckily our team followed up three days later with the TSP.

                           And we found out that TSP canceled his RMD distribution and they sent him a letter. Now the problem with the letter is A, he’s not going to get it for about 10 days to two weeks because we live in Alaska and B, he’s traveling. And so he wasn’t even going to see that letter had we had not called and followed up. And they had done a security check. And because this was his first time making an online distribution, they canceled it until they talked with him on the phone.

                           They did not call him. They did not give any electronic notification. They simply mailed a letter to him. So this is the importance in understanding how you’re custodian, whoever has your money, what’s going to happen when they have a question. Are they just going to cancel things? Is somebody going to call you? What does that process look like now? And Tammy, you have a lot of experience with this as well. We directly have experience transferring money out of the TSP. And I have never had this happen before. Have you seen or heard about this before?

Tammy Flanagan:        No, I haven’t either, but there’s always a first time for everything.

Micah Shilanski:  Yep. There’s always a first. So we were able to get that done, which is the good news. We were able to find that out. He got back from his vacation, he came back. We were able to get an RMD process in December, which comes out so great news. We checked off the RMD box, which is really good. But the downside with this Tammy is we’re actually planning on making two distributions, one in November for an RMD, one in December because we want to do a Roth conversion.

                           Well guess what? You can’t do two distributions in a month from TSP. You can only do one. And we went to the TSP. We’re like, “Hey, this is your guys’ mess up. Not ours. You canceled the distribution.” And they’re like, “Nope, these are our rules.” They wouldn’t wave them they wouldn’t change it. And so this cost, the client potential tax savings. It’s theoretical money, I get that. But the whole reason we wanted to do this was to save on future tax dollars. And now we don’t have that opportunity because of the TSP rules. And so I kick myself in saying great, why didn’t I see this earlier in the year and really push for this.

Tammy Flanagan:        But who would’ve known.

Micah Shilanski:  But who would’ve known. And so now we’re telling you are listeners. Now you should know, and this is why when we talk about different things and Tammy, your example of the RMD. You know what, maybe if you’re over 59 and a half and you’re thinking about retiring at the end of the year, maybe you take your RMD early. That’s okay to do. Maybe you do that in-service withdrawal from your TSP to satisfy that. If you’re going to do tax planning, don’t wait till the end of the year. Start moving money out of your TSP sooner.

                           Tammy, another issue that we came up with this TSP this last year, this last year has been fun for us with the TSP. A client was getting ready to retire. And so again, I’m big into that a year out from retirement, let’s set up as much as we can. He’s retiring at the end of 12/31, 2021 as his retirement date.

                           We’re chatting in February and March in 2021 and I say, Hey, “Let’s do a partial transfer TSP. We’re going to set the buckets up. We’re going to set these other things up. We need to get this in place.” Because almost all of his retirement money was inside of his TSP account. So he needed to live on that.

                           So a little reluctant says, “Micah, why don’t I just wait until next year? Once I retire, I’ll leave the money in the TSP for another year. It grows really good. It has low expenses.” All these reasons we love the TSP and I really kind of pushed on him and I said “My ideal is to get it set up in advance. What if something happens?” Low and behold, we go to do the TSP distribution. The TSP loses his check, Tammy. Now it’s only seven figures.

                           It’s only over a million dollars that has vanished. Now you could say the postal service lost it, whomever, but whatever reason from TSP to Schwab where it was going, it never showed up. So it took us two months to get it fixed. So good news is we knew we could fix it, but it took time.

                           So again, in all of these scenarios, we’re pointing out. Things can come up and again, not blaming TSP directly on all of these things, but saying know your custodian and know their limitations. And this is why you need to plan in advance. Had we had waited to January? And this had happened, oh my gosh. Talk about a lifestyle pain in the butt. He wouldn’t have had any money. It’d been three months before we got any money from him from the TSP and his pension probably would’ve been finalized by then.

Tammy Flanagan:        And the TSP doesn’t do interim payments like OPM does. So there’s just nothing coming in.

Micah Shilanski:  That’s a great point. There’s no interim payments.

Tammy Flanagan:        And the other thing you told me that I really didn’t know is that when the TSP transfers money from the TSP to your new custodian, be it Fidelity or your financial advisor, wherever that money’s going, they don’t electronically transfer. Just like whenever I sold my condo, there was a bank transfer and the money just showed up in my bank account. Now you’re telling me it’s a paper check that’s mailed through the normal first class postage, not FedEx, not overnight express, nothing like that. So there’s really no way to track where that check went, which is why you’re saying, they told them you had to give it two weeks to see if it actually shows up or not. That’s just incredible to me.

Micah Shilanski:  And this is something that is with all… This is an IRS requirement is my understanding. This is not a TSP thing. So all 401ks, TSPs, et cetera. When you do a transfer it has to be a mail check. They cannot do an electronic transfer, which is mind blowing in today’s age. So there’s some weird rule with the IRS that this is what they have to do. And so you’re right. They mail a check. Now with most like Fidelity. If I have a client with a Fidelity 401k, and we’re going to move that, Fidelity will give us an option. “Hey, we can snail mail this thing or you can pay $20 and we’ll FedEx.” Well guess what most clients are like you know what, I’m willing to pay $20 to make sure my seven figure shows up where it’s supposed to be.

Tammy Flanagan:        Not even a question.

Micah Shilanski:  Exactly. But with the TSP, that is not an option. When you fill out that form, it just goes to the treasury department and it’s snail mailed out as a normal check.

Tammy Flanagan:        That’s just crazy. That’s one of those Twilight zone things, kind of strange, but true.

Micah Shilanski:  Yeah. I’m so glad you brought it up because in my world, this is just what I deal with every day. And it’s just normal for me now.

Tammy Flanagan:        But people don’t know that. I didn’t know that. It’s something I’ll be warning my clients about as well.

Micah Shilanski:  So let’s kind of get into this a little bit of just saying, okay great. We gave you three examples of things that are just like, hey, we need to watch out for. So I guess Tammy, my takeaway with inside of this is now that we’re in January is really look at it and say, great. What do you want to accomplish at the end of this year or maybe the beginning of next year with your investments? And should you be setting that up now, if you’re going to make a big life transition, should we be doing things sooner?

Tammy Flanagan:        Yeah. So for people who are in that pre-retirement stage, I guess we can break it down also to people who are over 72, under 72. Or people who are going to need to start using that money right away, or the people who are going to be transferring the money to plan either tax planning or to do some other type of withdrawal planning.

                           So this is where it becomes kind of individual. So it’s a little difficult to give a broad brush to some of these, but we’re going to try to do it in a way that kind of gives you some good tips on ways to handle these decisions that you’re going to have to make and think ahead and think it through as to how that’s going to play out in the future. So that’s a lot to talk about. So where do we want to start?

Micah Shilanski:  Boy, well, let’s go over just kind, kind of real quick with the TSP. And again, we’ve done separate episodes just on the TSP. So you can really go through there, but Tammy there’s like what four, five options that we can choose from the TSP from a distribution standpoint.

Tammy Flanagan:        Yeah, there are, in fact there’s kind of a lot of different little things within each of those options. For example, if you want to take out a monthly payment in instance, you can tell the TSP I want to take out $2,000 a month or $6,000 a month, whatever it is, you want to start to withdraw and you can month by month.

                           If you want to change the amount, you can increase it, you can decrease it. And while you’re taking those monthly payments, if something comes up and you need for something, you can take a partial distribution in the midst of taking those monthly payments. So that’s just a way to create income for yourself. It’s flexible because you can increase or decrease it. You can even stop and start it. So if I decide, I want to go back to work. I don’t want that income anymore I can stop those monthly payments them back up again at a later date.

                           So there’s a lot of flexibility in the monthly payment option. Another option from the Thrift is the annuity option. And that’s the option where you’re telling the TSP to purchase a life annuity for you from the vendor who is MetLife. And you’re going to get a single premium annuity, which currently is at a fixed interest rate index of 2.075%, which is actually higher than it’s been in many, many years but it’s not a high interest rate.

                           So if you were to purchase that annuity today, that 2.075% interest rate would be locked in for the life of your annuity, which means if interest rates happen to shoot up to 5%, 8%, they’ve been even higher than that in historical rates of return. Well, too bad. You locked in 2.075%, which is a good thing. If the interest rates fall to 0.75%. And not such a good thing when it interest rates might be rising, which hopefully they… In some respects we hope interest rates do go up a little bit for certain things. For other things, we don’t want them to go up, but in some cases, and when it comes to purchasing an annuity, higher interest rates might be better to lock those in at a high rate.

Micah Shilanski:  Tammy, one of the things I talk with clients about that of saying, okay, great. It’s a 2% interest rate. Is this good? Or is this bad? And really this is a depends question in my world. It really depends on what do you need your money to do to grow for you in the future? So if you’re going to take out a 5% distribution every year from your accounts, and we could talk in the future about different ways to do that, if you’re going to take out 5% of your money every single year, but you’re only getting 2% interest, you might run into a problem.

                           So this may be something I would definitely say, if you’re looking at the annuity and Tammy feel free to push back, but definitely hit the pause button. There’s a lot of things locked with that annuities that are irreversible, that you cannot change in the future. Not making it bad, but making it a very limited investment and make sure you understand what that is before you get into it.

Tammy Flanagan:        Yeah. And make sure you understand too… This is where I’ve seen some mistakes. And I saw one big snafu made by an employee who had retired because she didn’t understand the difference between the survivor options on the annuity. And I’ve also seen other clients who didn’t understand the difference between a monthly payment, where the TSP computes that payment based on your life expectancy versus purchasing a life annuity, which is a fixed payment for life.

                           They thought they were just telling the TSP to send them a monthly check based on their age, where they could go back in and change it or stop it or start it. No, the TSP purchased them a life annuity. And once that purchase was made too bad, you made a mistake. Too bad you didn’t understand the difference. So really, if you don’t fully understand these different options and the differences between them find that out before you start to fill out the withdrawal form, because once you purchase that annuity, it’s a little bit late to make any changes.

Micah Shilanski:  Yeah. And this is a big thing, Tammy, and you just mentioned it. It’s not what you think this means. This is what does the TSP think. This means you could say life expectancy, life expectancy, potato, potato. No, these are hugely different things that you’re going to receive. So again, make sure you understand this. And I’m not advocating to go hire Tammy.

                           That’s not a sales pitch here, but make sure you’re working with somebody that understands, get an unbiased opinion in this situation. Because again, Tammy and I have run across this with unfortunately, several people that have come to us and said, “oh crap, this is what I did.” And we really got to be the bear of bad news and being like, “I’m sorry, you’re stuck with it. There’s nothing we can do. We can’t change this.”

Tammy Flanagan:        Yeah. It almost seems like we should make a list of these common pitfalls so that… But every time we think we’ve got that list complete, we find another one that comes up.

Micah Shilanski:  That’d be a good series. I bet that would be a good thing to put on the blog out there. Common pit falls and just start adding to it. So we have a variety of these different distribution options that you get to take from the TSP that’s going to be there. And so one of the other questions that come up is when do you want to start taking this distribution options?

                           And I think with the theme of the podcast is you want to start this process sooner than you may think. I really want to give this cushion time, especially if we get into the end of the year. Man, I love having all my end of the year stuff with our clients done by December 5th, because in case there’s something that takes longer we have time to figure it out. If you wait until December, if you wait until close to new year’s, there’s a very high likelihood you may not be able to get some things done.

                           So this would be something that you know what, maybe you just start this setup in March. If you know you’re going to do a tax planning, if we know we want to do a Roth conversion. We got a lot of money in the TSP. It’s been beautiful, but you were saying you know what, I want to pay a little taxes now, maybe I want some tax-free growth. Do you really need to wait till the end of the year to get it set up? Now, there could be good reasons to wait till the end of the year, but do you want to start moving some out of the TSP now so it’s in an IRA? So it’s ready to go. So it’s to do that Roth conversion, these are some things you might want to really want to think about.

Tammy Flanagan:        Yeah. I think that we never realized, because the TSP does run fairly electronically. You make your withdrawal election online using your TSP sign in code. So it seems like things go pretty efficiently, especially when we compare it to the paper based FERS application that has to get processed manually at OPM.

                           But like you said, there can still be some pitfalls here in not understanding the withdrawal options, not understanding the tax ramifications or the RMD distribution rules. So I think it’s an education thing as much as it is an efficiency thing when it comes to the TSP.

                           So I think our job, one of the takeaways I’m getting from this is I need to learn how this really works. Maybe talk to someone like a financial advisor, a tax planner, CPA, somebody who can help me make sure that I’m making the right decision that is going to accomplish what it is that I want to do.

                           Because I might think I understand it, but I’m really electing something that’s different from what I thought I was doing. This is all new to federal employees. The whole thing was new back in ’87 when it comes to investing in the first place because federal employees for the most part came into government, worked 30 years, retired and got a check every month for the rest of their life.

                           So we’ve had to learn how to invest, how to save, how to manage money. Now fast forward to 2022 and now we’re coming out of the government with these seven figure TSP accounts, high six figure TSP accounts. And now we’ve got to have another educational time of learning what to do with all this money we’ve saved. Can it be a blessing or is it a curse when it comes to paying the taxes on it? Leaving it as a legacy to our family, using it as self-insurance for long-term care planning. I mean, you’ve probably seen this with your clients. They have all different things in mind of what they’re going to do with this money aside from just creating monthly income.

Micah Shilanski:  Yeah, exactly. Sometimes people are like, I want to pay off the house. I want to help kids with the… Excuse me, grandkids with college education, all of these things. Well, great. This is all your retirement money. What’s the best way to use it. Tammy, I want to go back to something you said, because it kind of shocked me a little bit. Almost the same thing.

                           You had mentioned that when you look at the TSP, it’s all automated. It’s all online. It’s super easy to use. And that’s so funny because I’m on the other side of the TSP where whenever I’m dealing with it, it’s 100% still paper based. So if you’re going to do a TSP transfer, the client has to log into their account. They have to fill out all their forms. Then they have to hit print. They have to be printed. I have to sign off on them, then fax them into the TSP office. So it’s a very paper process. And I was like, “Wow, it’s just like the FERS application in my mind.” You sent it electronically. Then we clicked print and we go from there just kind of funny between those two different perspectives. But yeah, I love that.

Tammy Flanagan:        Yeah. At least you can start the process electronically to some extent, but like you said, it’s really not. And heaven forbid if you’re married, because then you have to go get a notary to notarize your spouse’s signature. Because the only thing you can do without your spouse’s consent is purchase a life annuity, which is the one thing we probably don’t want to do right now.

Micah Shilanski:  Right. Very much so.

Tammy Flanagan:        So no, there is a lot of paper based to it. When it comes right down to it.

Micah Shilanski:  Yeah. A lot of paper based. And again, these are… A lot of these are irreversible decisions. Not all of them, but understand what they are I think we is a really big thing. I think we’re going to have to break this maybe into a different podcast as well. Because we didn’t even really get into the Roth side of the equation, which can have a huge effect on distributions.

                           But Tammy let’s make a quick little transition if you’re good. And let’s talk about some action items for our listeners. And what are some big things that they can think about? And I’ll go first if that’s okay. I’ll say you know what, the number one thing I would say is look out at the next 14, 15 months in your time horizon. And from now look out of the next 14 or 15 months and say, great, what’s going to be different. Am I retiring? Do I need money out of the TSP? What are tax things that I want to do? Don’t think about it a month to month. Think about it for the next 15 months. And then the next question with that is great if you’re going to do something should you do that sooner? What’s the benefit of waiting.

Tammy Flanagan:        Yep. And I would add I was talking about education and the TSP, I think it started throughout the pandemic, but now they have… You can individually register for webinars that are live training sessions. And so if you go to TSP educational resources, you’ll see a whole list of topics for webinars. And some of those topics include post service withdrawals, pre-separation, retirement and beyond.

                           And many of them will have upcoming dates where you can schedule and register. I see one here for January 20, there’s mid-career seminars. So they have a whole wealth of educational sessions that you can log onto and at least get that much. Because sometimes reading it in a book is a little different than hearing it or having a chance to a ask questions. So any opportunity you get to learn more about this, including listening to this wonderful podcast. But if you want to hear it from the TSP, they do have some good trainers there. And I think you can learn something from those.

Micah Shilanski:  I love it. The other thing that I’m going to say is I’m going to piggyback on just what you said, Tammy, just to redefine a little bit. When you go to those webinars, when you do that training the question I would… If you’re pre-retirement mode, about to retire and take money out of the TSP, the question I want you to make sure you fully understand how do I get my money out? How do I take withdrawals? How do I do the… What are the consequences of doing it? Life expectancy with an annuity or monthly payments for life expectancy. What’s the difference?

                           Those have big things. So I want you to take it with a lens of saying, “Great, how am I going to use this money?” You probably already know how it grows. You’ve had a huge career. You’ve put money in. It’s grown, which is beautiful. Now you’re in a new phase of life. So focus on that, how am I going to get my money out? Right?

Tammy Flanagan:        And don’t look for the withdrawal options or the withdrawal form on the TSP website because they no longer have the form. It used to be nice. I would sit down with a client and show them the form and help them kind of check the right boxes and make sure they knew what they were doing.

                           But now you really have to kind of rely on the withdrawal booklet that gives you all the different options and just kind of read through that. Maybe highlights some things there and that’ll help you start thinking in terms of how this money can be used. How can I create income with it? What are some of the pros and cons of leaving it in the Thrift plan versus moving it to an IRA? Which I think we’ve talked about in previous podcasts and it’s probably worth it for us to do that in the future at some point. Because there are a lot of things that are great about the Thrift, but there’s also some limitations within the TSP. And I think it’s worth pointing out both sides of that coin.

Micah Shilanski:  Very, very much so. And remember the last action item, which is super important, share this podcast, get this message out. We’re doing this because Tammy and I really enjoy getting this message out and building this community, the federal employee community, that’s knowledgeable about their retirement. You got a quick second you want to jump on iTunes and give us five stars because come on if you made it this far, you got to love the podcast. So help us, that helps us out tremendously get this message out. And until next time happy planning.

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