--It looks like TDAmerica and Merrill Edge (through Merrill Lynch) are the only two that accomodate withdrawals based on life expectancy the best. They will code the exception.
--Etrade will not withhold any taxes and you would need to set up quarterly payments with IRS or change withhold on your annuity to avoid any penalty on your taxes from underpayment.
--Schwab, Fidelity, VanGuard and Scott Trade have option to withhold taxes, however, they put responsibility of claiming exception with the account holder, several will code it as early withdrawal "no known exception." All that is required is to file the exception is IRS Form 5329, which you may still need to do annually with the ones that code it properly.
For all of the outside firms, you would have to monitor your account closely to see that you have the cash available to make the distributions, although you may have more flexibility in when the payments are made (monthly, quarterly, annually). There also appears to be couple of other calculation methods that I was not aware of--but have not looked into.
If you do not strictly comply with the Substantially Equal Periodic Payment (SEPP) withdrawals, you may face 10% early withdrawal penalty. It seems like TSP may be a better option for folks in my situation. Older people don't need to worry about these issues. I am sure that full service brokerage wouldn't be an issue but I'm not willing to pay someone 1% or 1000's of dollars of my retirement savings annually. It just seems counterintuitive.
Philmiec does make a great point, if you close out your TSP--you can't get it back later--at least not without going back to work for the Federal Government
I just retired so maybe I'll be supplement grandfathered in.
Anyway, sorry I got off track. I'm 56, I and won't be 59 1/2 until 9/13/2019. I'm looking to keep $90,000 in my TSP and start monthly withdraws in January, 2017 for 3 years onto December 2019. That would give me an extra $30,000 a year on top of my FERS retirement. I want to take the remaining $800,000 and roll that into an IRA at TDAmeritrade or Vanguard.
Since I have $90k to augment my income for 3 years to 77K annually, that gives me plenty of time to add addition money to the principle. My goal is a minimum of 6% annually on $800K or $48K. 6% was my avarage for many years until 2009, then it went way up. Last year was 11.5%, this year over 13% as of today. I think I can squeeze another 6% or more out of the I & S Funds before years end.
If I wasn't ham streamed like a one legged man in an ass kicking contest like TSP likes it, I'd be a lot further ahead. With an IRA, you could easily buy & sell the EFA ETF (I Fund sort of) periodically until you reach your yearly target. The bid/ask and volume would easily absorb your shares. I'm talking less then $20 fee for each buy & sell order. What's $20 when you just made $8-16K at a time? Your goal should be to reach a certain amount of money on top of your principle saved, making a predetermined amount each year until well 70 1/2. After that you could start the yearly draw done while parked in a safe bond fund. No reason to deplete too early.
If you're looking for 6% annually and happened to get 10%, I recommend you take out the whole 10% and set the exta money a side. You never know if you have a bad year because of anything and now you can use the extra funds to live off in case your principle has dropped, then you can wait to get back to even and start over.
crondanet5 wrote:Talk to Tractor.
Crondanet5, I know you directed your comment to evilanne but you have me curious. I see a wwwtractor and a tractor123 listed as members. Which tractor are you speaking of and is there a post you can point me to which details the tractor method? Thanks!
rcevans wrote:You will most likely never get a better management fee than what the TSP charges(good reason for this is because the government wants your money there). Many IRA holding companies will threaten or charge if you try to trade often in less than 6 month period. What you can do is a partial withdrawal up to 99% but never take it all out. This way you still have a TSP account and if you are not satisfied with what you went in to you can roll from an IRA back in to the TSP. Someone correct me if I am wrong but this is what I did.
ProFunds.com has been waiving the management fees the past couple years and you can transfer your funds daily with no fees. I priced out a brokerage (based on the 63trades I made the year before) and at $20 a trade ($10 for the trade and the rest was for penalty fees for trading too much and a fudge factor) it was only $1260 for the year. I don't consider that too steep of a price to pay on $100,000 at 22%. Feel fre to check the figures and correct me.
Pending AllocationsUnder development. For now, you may view Pending Allocations by going to "fantasy TSP" and selecting "Leaderboard sort" of "Pending Allocations".
What else"Don't ever half-ass two things. Whole-ass one thing."
- Ron Swanson