The Foreign Service Journal, December 2016

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.