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66

DECEMBER 2016

|

THE FOREIGN SERVICE JOURNAL

Retiree Corner articles are written by Retiree Counselor Todd Thurwachter.

STAY INFORMED. STAY CONNECTED.

Managing Your TSP in Retirement

For years, Thrift Savings Plan

participants have been urged

to maximize their contribu-

tions to their TSPs, but what

should they do after building

up their nest eggs?

On Oct. 6, AFSA hosted its

11th Federal Benefits Speaker

Series Program, “Retirement

and Beyond.” Randy Urban,

training and liaison specialist

for the Federal Retirement

Thrift Investment Board,

gave a useful and engaging

presentation to the AFSA

community on managing

your TSP after retirement.

Speaking to almost 100

attendees, Mr. Urban con-

firmed that a TSP account

can be maintained into

retirement, although holders

can no longer contribute

directly once they leave

active-duty status.

He also noted that a

traditional IRA or 401(k)

can be rolled over to a TSP,

which could save a signifi-

cant amount in management

fees (management fees for

a TSP are about 6 percent of

the average fee for a 401(k)

plan). Mr. Urban stressed

that this transfer must be

done correctly to comply

with tax laws and avoid any

penalties.

If you are considering

a donation to a charity or

501(c)(3) organization (e.g.,

AFSA’s Fund for American

Diplomacy), note that you

cannot transfer directly from

a TSP to a charity without

paying tax on the distribu-

tion. To make a tax-free

Qualified Charitable Distribu-

tion, you must first “direct

rollover” to an IRA and then

make the QCD from there.

Mr. Urban discussed

a number of choices for

withdrawing your TSP funds

after retirement: for example,

choosing a partial or full

withdrawal or a custom mix.

Among “full-withdrawal”

options, you can opt for a

lump sum, monthly pay-

ments, purchasing an annuity

or a “mixed withdrawal”

combining all three.

Alternatively, TSP hold-

ers may decide to let their

TSP account grow until they

reach the age of 70 and six

months, at which time they

must begin taking a Required

Minimum Distribution. Failure

to begin taking the RMD as

required can lead to penalties

of up to 50 percent of the

RMD for that year.

The RMD is calculated

based on the account hold-

er’s life expectancy using the

IRS Uniform Lifetime Table.

For accounts with a Roth

TSP balance, withdrawals are

prorated and tax withheld on

the taxable portion.

AFSA encourages all

retirees to consult a financial

planner before making any

decisions about managing

their finances in retirement.

The TSP website,

www.tsp.

gov, has a range of resources

available to help you make

your decisions, as well as

the forms and procedures to

execute those decisions.

Find the summary recap,

video and PowerPoint of the

presentation at

www.afsa

.

org/retiree. You can contact

AFSA’s retiree counselor via

email at

retiree@afsa.org

or by

phone at (202) 944-5509.

n

AFSA/GEMMADVORAK

Randy Urban, training and liaison specialist for the Federal Retirement Thrift Investment Board, speaks to about 100 AFSA members at a workshop on

Oct. 6. In an in-depth review, Mr. Urban discussed Thrift Savings Plans, spouse and beneficiaries’ rights and retirement income options and goals.