70 1/2 have to withdrw from TSP, what to do?

[crondanet5]

Unfortunately this is the position many Americans will shortly find themselves in. My morbidity study indicates it was the lower end of the life expectancy scale that improved, not the top. And a recent study reported U.S. Life Expectancy had dropped a little. So the idea of working longer is not good. Do you want to work with never seeing your social security pension begin? Could happen. Now for your Mom's situation.

First I have to review the requirements of TSP Age 70 1/2 withdrawals myself to avoid giving you bad advice. Above all, I do not recommend the annuity. She needs to make money in future years with her remaining TSP balance to pay for increasing costs of energy and food. Let me get studying.

[sfohara]

I would consider rolling it over into an IRA, and then have the flexibility of changing the distributions monthly as needed. The TSP allows you only to set your distributions once per year, with annual adjustments thereafter...

[sfohara]

I would consider rolling it over into an IRA, and then have the flexibility of changing the distributions monthly as needed. The TSP allows you only to set your distributions once per year, with annual adjustments thereafter... not the most distribution friendly option. I am not a fan of annuities!

[MMARTI7]

I would consider rolling it over into an IRA, and then have the flexibility of changing the distributions monthly as needed. The TSP allows you only to set your distributions once per year, with annual adjustments thereafter... not the most distribution friendly option. I am not a fan of annuities!

I don't think is good idea to go for Annuities.

[crondanet5]

The latest posting by ELPHABA on this site (and in this general topic heading) may be the answer to your prayers for your mother's situation about transferring her TSP account. The key is to withdraw what you need, but make the rest grow-- not sit. Sitting means your available balance drops and that means less years of money to assist in meeting her needs. Good luck.

[loloprice]

boy, I'm surprised about how much inaccurate info is posted here. This is my first visit to the site. I recommend you get the book published by AARP: http://www.amazon.com/AARP-Retirement-S ... 1402743416 the Retirement Survival Guide. maybe your mom needs to work on her budget. anyway: re your question: the year after anyone with a deferred tax account (regular IRA, 401k, etc.) reaches age 70 1/2, then the owner of the account must withdraw IRS required minimum distributions, based on formulas you can find on the IRS site, or be subject to severe penalties. (for articles, google required minimum distributions). But you do not have to roll over to Fidelity (where I have had funds for decades, but never got great advise), which has much higher fees than the TSP funds. The TSP fees are about $30 a year for a $100,000 account. Cannot be beat. So, your options regarding "withdrawals" from TSP: 1) take regular monthly payments - which can be the IRS required minimum distribution; 2) convert to an annuity, one of which is sponsered by the TSP Board. 3) total withdrawal from TSP (I don't recommend completely leaving this wonderful resource); 4) a one time only partial withdrawal from TSP. So, I think you should consider a "partial withdrawal" from TSP after meeting with a fee-based financial planner. This would allow you to purchase some vehicle not offered by the TSP, e.g., an immediate annuity (not sponsered by the TSP board) or one of the many new products, variable, guaranteed income, annuities. But if you leave a sufficient amount in the TSP, your mother can also receive the monthly payments, required by the IRS. [someone recommended rolling over to a Roth IRA - I think that's too late, as she'd need to pay taxes on any amount rolled over to a Roth, and it just doesn't seem to fit her circumstances]. [someone else wisely noted that Fidelity folks are simply the sales force for fidelity. I had an appointment with a Fidelity financial advisor once; only to learn he didn't even have a college degree.] So, basically, review the AARP survival guide (you'll need the info for yourself as well), and strongly consider continuing some funds with TSP, as you'll find from other parts of this site, that its a very valuable asset exclusively available to federal retirees. See, e.g., the Morningstar article: What the Thrift Savings Plan gets right, and what it's missing.
http://news.morningstar.com/articlenet/ ... ?id=348657
good luck.

[Lint]

Impression is that your mother is very conservative & wants to minimize change.
Here's a suggested approach, that's pretty auto-magical.

1) Leave her money in TSP, in whatever funds she is comfortable with.
2) From her current balance, compute a 4% withdrawal, less 15% for taxes.
3) Divide into 12 monthly checks. Ask her if this amount would help with her current budget and get her to set it up.
4) This will cover her IRA required withdrawal until age 73. (Unless her investments grow larger than the 4%)
5) If her monthly checks (make it a deposit into her bank account if possible) do not cover the IRS required, there will be a 13th check sent to her.

ALSO the TSP will be sending her letter regarding IRA required withdrawal.

[Retired last year and remember this 13th check info from the presentation.]