You are going to retire without knowing the rules re TSP and are planning to tap TSP as early as 2018?
At least you understand the issue of “equal monthly payments.” How is it that you know that and not the rest?
The rules re TSP withdrawals are to be found here:
Please read that booklet BEFORE executing your plan to retire.
Crondanet raised Very Important issues that you should carefully consider in connection with the rules set forth in the above booklet.
Early Retirement, which is what you are attempting, is available for Fed Employees who have ALL their ducks in a row, including ALL The Above AND savings that they themselves control.
If you do not know ALL the above, as is apparent, AND Do Not have Substantial Savings beyond TSP, I do NOT recommend retiring until you reach the age of 59½, upon which date you may roll your TSP account over to an IRA and run and withdraw from it as you wish, as Crondanet quite rightly suggested above.
As you’ve described matters, you may retire ONLY IF you have Substantial Ex-TSP Savings so as to tide you over until you’re 59½, NONE of which you’ve indicated.
Please amend your plans so as to retire at age 60.
You’ll be Vastly Better Off!
Otherwise, you are going to have Big Trouble!
You pay the taxes based on your marginal income rate so it isn't any cheaper for me, but it will grow tax free. If you have a substantial amount in your retirement account(s) with a reasonable rate of return over the years, it should grow and you may actually have a higher tax rate later when RMDs-Required Minimum Distributions-kick in at age 70.5 --you have your pension, Social Security, your TSP/IRAs and any other income.Buckeyedog wrote:I'm also planning on retiring at 56 in less than 3 years. I'm definitely rolling it over into an IRA. However, this talk about converting some to a Roth.........so how does that work and why do it? Is it because the taxes to convert it are cheaper than the "income" tax rate?? Just have never thought about this before.
The primary reason is pretty much a balancing act to manage the amount of taxable income flows & when taxes are paid. There is no RMDs for Roth IRAs and no tax impact, if and when you decide to withdraw it. It works well as an emergency fund and it passes to your beneficiaries tax free as well. The regular IRA is designed to be spent over the course of the individual's lifetime.
The primary reason is pretty much a balancing act to manage the amount of taxable income flows & when taxes are paid. There is no RMDs for Roth IRAs and no tax impact, if and when you decide to withdraw it. It works well as an emergency fund and it passes to your beneficiaries tax free as well. The regular IRA is designed to be spent over the course of the individual's lifetime.[/quote]
Thanks!! I'll likely check into this.