Q & A
I retired this past January from the U.S. Postal Service and am wondering what to do with my TSP [Thrift Savings Plan]. … Is taking my TSP in one lump sum a smart or dumb move?
Full Question: I retired this past January from the U.S. Postal Service and am wondering what to do with my TSP [Thrift Savings Plan]. I don’t what to touch it until I am at least 66, which is a year and half from now, My plan is to take it out in one lump sum and pay all the taxes at that time. Then I would have it if I need it and if I die my daughter will not pay a penalty to get the money out. My monthly annuity from the USPS and monthly check from Social Security, when I start drawing it, should be enough to live on. But then everything looks good on paper! I know the money can stay in the account until I am 70 ½. Also I have control on where to invest it. Just cannot add to the sum that’s there. Is taking my TSP in one lump sum a smart or dumb move?
Answer: Figuring out how best to take money out of retirement savings is more difficult that deciding where to invest retirement savings during our working years. That’s why my main recommendation is to hire a fee-only financial planner, tax accountant or comparable professional to run the numbers and discuss trade-offs of different strategies with you so you’re able to make an informed decision. Even more important, I would involve your daughter in any meetings and decisions. Your question is an easy way to jump-start valuable conversations about family finances as you get older. Read more.
Source: StarTribune - August 11, 2013
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