/m42189, OPM will only mail checks if you have some sort of hardship.
Direct deposit is the preferred way.

If you took the EO and you were not 55 or older sometime THIS YEAR... Then the only way to avoid the early withdrawal penalty on your TSP is to wait until you are 59.5 years of age OR take what are known as Substantially Equal Periodic Payments (SEPP) over the course of your life expectancy. PERIOD!!!!

However, you can change this decision after you turn 59.5 years of age. Once you turn 59.5 years old you can do whatever you want with your money. It's NOT that complicated. But if you retired THIS year at 54 and you don't turn 55 until next year, you're stuck with that penalty unless you do the SEPP thing. If you have say $70,000 in your TSP, you'll get perhaps $200 - $250... maybe $300 a month... I ran the numbers but don't recall the exac amount. Besides it depends on the anticipated interest rate, etc. Bottom line, it ain't a lot of money... But you'll get it every month and you'll still have most of your TSP money in your account when you turn 59.5 years of age.

I know what I'm talking about here. Been studying this stuff for Yeats because I HATED that rathole I worked in and wanted out, saw these EO's coming around... Even regretted I had ever invested in the TSP because of these idiotic penalties which almost NOBODY understands how they work.

If you have any specific questions about this TSP and the penalties, when they apply, when they don't, ask me directly and I'll try to answer back within a few days. But what I've said in the first couple of paragraphs above is the truth. That's the way it works. Retire in the same CALENDAR YEAR that you turn 55 or older... You have other ways to avoid the penalty. But there are rules regarding that, too. You've basically got a ONE TIME OPPORTUNITY to get the money with no penalty. You can choose to withdraw the money a few hundred or a few thousand a month... a payment plan. But you don't have unlimited repeated chances.

Ask me if you have a question. Don't screw yourself up with that penalty!

Retired on Oct 31 age 59 i want to withdraw the 52 k want to wait till jan they say no penalty just the taxes is that right? tx

Susie, that is correct, as I understand it. But you can only make this withdrawal a single time before you reach 59.5 years of age without in curring a penalty... You can take all of the money out at once if you want to... or you can request it in substantially equal payments over a number of months... 6 months, or 14 months, 62 months... whatever you choose. But you can't change that amount until you turn 59.5...

Bear in mind you only have this one-time withdrawal option if you are 55 or older and separated from service. It is also a requirement that you can not have had any prior taxable distributions (in-service withdrawals for hardship or whatever) if you have an outstanding TSP loan which you do not plan to pay back, THAT will be considered a taxable distribution as well... And that's it. Doesn't matter if it's $3 left remaining due. It's a taxable distribution and you ONLY GET ONE freebie like that if you are under 59.5 years of age.

Now this is how I understand it to work and I believe I am more knowledgeable than 99% of the people hitting this site. It is rather complicated and there are a lot of caveats you have to be mindful of... making changes, prior taxable distributions, outstanding TSP loans... These are things that can affect you. Personally, I think the TSP literature does a poor job of explaining this stuff ESPECIALLY if you retire before the year you turn 55. That TSP handbook or whatever it is spends 90% of its content trying to convince the reader to leave the money in there, to save it for a rainy day. Good advice perhaps, but doesn't explain very well how to get the money out without a penalty. That book is geared toward people who retire under normal circumstances, NOT under early out provisions.

Susie, you're close to 59.5 years of age already, so if you handle your withdrawal with some care, you can avoid the penalty. Just make sure you don't go back for a second withdrawal before reaching 59.5 years of age.

One more thing. I'm NOT a financial advisor. I hope no one will base their understaning of this stuff solely on what I say. LOOK it up for yourself! See it in print! Don't take my word or even a TSP advisor's word over the phone. They get new people all the time, and they are not used to dealing with early outs. They may know what they're talking about if you retire at 55 or older... But some of them hav. Given out misinformation because even THEY don't understand it.

I hope this helps somebody out there. It took me a long time to figure out how this all worked. I'll guarantee you there are many people hitting this site who have no idea how the TSP works, nor do they even know they will lose their miltary credit at age 62 if they did not buy back there military time. Some of these people are going to take a 10% hit on their TSP withdrawals through penalties... And then when they turn 62 they're going to lose $350, maybe $700 of their postal annuity to catch 62 when they turn 62. They will also only pick up maybe %40 of their anticipated social security income, too. These people did NOT do their homework and GOD KNOWS the PO didn't do anything to encourage us to learn, nor did they provide any training to us regarding this stuff. And I know a lot of you will say that should be our OWN responsibility. True enough. But the USPS is now stuck with a lot of people who WANT to retire but can't afford to because they didn't know about all the penalties and complicated rules. Serves those boneheads right.

I am so glad I hit this site over the last several years. This is where I learned about this stuff in plain English.

Susie... one more thing. Are you 59 and a HALF? Or younger than that?

Even calcating exactly what 59 and a half comes out to can be problematic. If you were born Feb 15th, it may not follow that you would turn 59 and a half on Aug 15... It may be the 18th or so because I think they count the days or some weird crap like that. And if you get the withdrawal ONE DAY TOO EARLY, that penalty will be imposed. They don't bend on that rule, not an inch.

/m42198,
http://www.govexec.com/dailyfed/0306/032406rp.htm

X /m42199 Okay, here's a question:

Early out, under 55, withdraw/roll over all TSP funds into an IRA...penalty?

AND...what about rolling in to a Roth IRA (though I assume this is a taxable event since a Roth is post-tax dollars)...?

Thanks.

common-sense... Below is a link to a q&a document. I believe question # 52 addresses your question. It's a very informative site overall.

http://www.postalreporter.com/retireqa.htm#table

anyway, since I'm doing this from my iPhone, it's difficult to go back and forth cutting And pasting. The "answer" to question 52 mentions that there is no penalty for rolling over into an IRA even if you are under 55... But it does not mention the Roth IRA. I agree with you though that since the Roth IRA is post tax, you're going to have to give uncle Sam his share when you do the rollover. The early withdrawal penalty, it appears to me according to the text, is waived. You may have only one opportunity... I'm not sure about that. But I am pretty sure you can roll over the whole sum or any portion thereof into a traditional IRA and that you won't pay a penalty or taxes.

Hit that link and go to question 52. In fact look at the whole table of contents. It's a long document, pretty thorough, and appears to be well done to me. I think it's trustworthy.

Common-Sense... If you don't mind my asking, why would you want to roll your TSP to an IRA anyway? Isn't the TSP just as good? Very low management fees. Safe and reliable. Do you think you could earn better returns?

One more thing, Common-Sense... I'm pretty sure your question is answered in a little more detail in the TSP booklet # TSP-02. It's available on the TSP website and you can download it as a PDF document. I read the whole thing and found it rather lacking in regard to the concerns of people like us, under 55 and retiring early. But it does provide some useful information. It's just that it's geared primarily to address the concerns of regular retirees. That's what it was designed for. I haven't really found much in the way of informative literature when it comes to early retirement. It seems to be pretty scarce.

so why would somebody with 40+ years, who is in a job that he KNOWS is being abolished, and will have to go from a T2 office job & a 630am start to a T3 floor job & a 230pm start not just TAKE THE STINKING $15K??????

While it may not matter to him, if you were in that position and you knew that staying and making the post office abolish your job would also drag down 7-8 other people with you, would you have stayed or gone?

X-stew... If you turn 55 next year, you will incur a penalty on your TSP withdrawals. Have you read any of my recent posts? Do you know the rules regarding the TSP? If you retire before the year you turn 55, there IS a penalty unless you take the money out as an SEPP over life expectancy, or roll it over into an IRA, annuitize it ove life expectancy, or wait until you're 59.5 years of age.

That's what I've been harping on for the last 5 or six posts... And long before that, really.

Very few people really understand this stuff.

BooBooKitty... Yes you can annuitize it if you are under 55 and there will be no penalty. The annuities tend to pay better than the SEPP too... But if you die two months after you retire, the insurance company keeps all or most of the money. Actually there are several types of annuities, so you can choose one that fits your needs... On some plans if you die early on, your survivors get nothing. With other plans, they might get a sizable "inheritance"... And if you live a long time, they'd get less, obviously. Bottom line, though, is that you lose control of your money. In return you get a somewhat larger monthly check than you would with an SEPP. It's a gamble, really. Insurance companies betting you'll die sooner rather than later and of course you're betting you'll live longer.

If the whole economy keeps going the way it is, I don't think it will matter where you have your money. It won't be worth anything. I think we're heading for hyperinflation within a decade, maybe sooner.

Personally, I don't trust insurance companies. I think Mass Mutual is the company that handles most of thes annuities, if not all of them. I'm no expert on that stuff anyway. I'm not interested in an annuity.

X /m42204 Rolling over my TSP into an IRA with my brokerage firm gives me significant flexibility (with no fees) for most, if not all investment vehicles, i.e., bonds, mutual funds, equities, etc. Could I get a better return? That would depend on what investments I'd make. Having said that, the TSP is a safe alternative and the G fund is a one-of-a-kind fund available only to those participating in the TSP. Thanks again for your info.

G fund is just a basket of govt. securities, period. Easy as pie for you to find out the allocation. It's just as available to IRA holders as to TSP people. Not a secret.