Partial Withdrawal and Monthly Payment
Moderator: Aitrus
Partial Withdrawal and Monthly Payment
I've decided to make a partial withdrawal after leaving my agency. I know there will be a default 20% withholding but what I'm trying to understand is if I chose to do installment payments over the next 12 months, would I be taxed on each monthly payment (a mandatory 20% tax withholding??)?
Re: Partial Withdrawal and Monthly Payment
Yes, each month’s payment will have the default 20% deducted.
Re: Partial Withdrawal and Monthly Payment
This is not necessarily true. You can set up equal monthly payments in any amount. If the amount in your account allows those payments to last 10 years or longer, you can select the amount of taxes withheld (there is a default, married w/ 3 dependents, but you can change it). So, say you want $3K/month, 36K/year. If you have a $360K+ balance, you are allowed to select your withholding. Then, you can change or cancel these payments at any time. Make sure you read the TSP booklet Withdrawing From Your TSP Account.
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