“Hi, I have a question regarding Roth TSP which I have not gotten a clear answer on. I will be 54 this year. I plan on retiring at 62 which is 8 years from now. I started contributing to a traditional TSP when I started my Federal employment. I now want to start a Roth TSP account. However, I have heard that an employee has to contribute to a Roth TSP for 10 years before the withdrawal. Otherwise, a penalty applies. Is this true? Thank you for your consideration.” – Tat
This question is about avoiding taxes and penalties when withdrawing money from the Roth TSP. First, let’s review this TSP option:
You may transfer or roll over to a Roth IRA or employer Roth account
As long as earnings are “tax-qualified,” you will not be penalized for the distribution of those funds. They will come out tax-free. The 10% early withdrawal tax penalty never applies to contributions made to Roth balance or to qualified distributions of earnings
This tax penalty may apply to non-qualified distributions.
You must specify if you wish to take your withdrawal from traditional, Roth, or both balances, for example, if you want to take a $10,000 withdrawal from a $150,000 TSP balance that is invested:
Then, the pro-rata withdrawal would come out as:
You may specify if you would like it all to come from traditional during the withdrawal process.
Bottom line:
Reference: Important Tax Information About Payments From Your TSP Account
Warning: Taxes can be complicated, it might be best to consult with a professional if you are not sure how to withdraw from your TSP to your best tax advantage!
“I am a 35-year USPS employee and am planning on retiring this year. I am 58. I have heard about the backlog of retirement applications that OPM gets at the
Nealy asks a question that we see every now and then from federal employees: “Should you collect unemployment while you’re waiting on your Federal Employee Retirement System (FERS) pension
I am aware that after I put in ten years’ federal civilian creditable service and then retire, my FERS annuity will be reduced monthly by 10% for the surviving spouse
Hello, first off, I wanted to say I really enjoy your podcasts. I have really learned a lot from you both over the past year or two. I am a
Get the most out of your federal retirement benefits by taking advantage of the FERS resources created by Micah Shilanski, CFP®, and the team of independent financial advisors at Shilanski & Associates, Inc. Join the thousands of federal employees who trust us to guide them in their retirement planning journey because of our unique perspective of how your FERS benefits contribute to your comprehensive financial plan.
Year after year I see Federal Employees missing the same critical concepts in their federal retirement planning. That’s why I’ve created an online workshop to help educate Federal Employees on these critical concepts.
Advisory services offered through Shilanski & Associates, Inc., an Investment Adviser doing business as “Plan Your Federal Retirement”. Plan Your Federal Retirement is not employed by the United States Federal Government and does not represent the United States Federal Government. All content on this site if for information purposes only. This website is not personalized investment advice. Securities investing involves risks, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful. Please review our Customer Relationship Summary (Form ADV Part 3) for important information about our services and fees.
Opinions expressed herein are solely those of Shilanski & Associates, Incorporated, unless otherwise specifically cited. Material presented is believed to be from reliable sources, and no representations are made by our firm as to other parties, informational accuracy, or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant, or legal counsel prior to implementation.
Content provided herein is for informational purposes only and should not be used or construed as investment advice or recommendation regarding the purchase or sale of any security. There is no guarantee that any forward-looking statements or opinions provided will prove to be correct. Securities investing involves risk, including the potential loss of principle. There is no assurance that any investment plan or strategy will be successful.
7 CLASSIC RETIREMENT MISTAKES Federal Employees Make
Your privacy is our top priority, and we promise to keep your email safe! For more information, please see our privacy policy.
7 CLASSIC RETIREMENT MISTAKES Federal Employees Make
Your privacy is our top priority, and we promise to keep your email safe! For more information, please see our privacy policy.
