Lump Sum withdraw
If I withdraw 30k from my traditional IRA, how do I calculate the taxes I will owe?
If the TSP has received their required form to transfer your portion, you can request a direct rollover to your IRA. Since you are over 59.5, you can take distributions from the IRA without penalty and in the frequency you wish, although you will owe ordinary income tax on the IRA distributions. The 3 largest IRA custodians are Vanguard, Schwab, and FIdelity and all of them provide you with assistance in rolling over your share of the TSP. The TSP will require their own form to be completed, but any of those 3 firms can probably assist with that and coordinate the rollover from there.
Permalink Submitted by Alan - IRA critic on Wed, 2020-01-22 16:01
If your TIRA is 100% pre tax (no non deductible contributions made), the additional 30k of taxable income would be taxed the same as if your salary increased 30k. Therefore, the tax on this distribution can only be determined after considering all the components of your tax return including all your other income, standard or itemized deductions, etc. It should not be too hard to figure out depending on how your taxes are determined. If you use a professional preparer, they might be able to provide an estimate. That said, you are asking about a 2020 distribution and the rest of your 2020 tax data is not yet known. If you expect that your 2020 income will be about the same as 2019, when your 2019 return is prepared soon, you could plug in an extra 30k of IRA income to see what the difference is. You also owe a 10% penalty if under age 59.5.
Permalink Submitted by Bill Winters on Wed, 2020-01-22 16:10
Thanks. I’m 60 and receiving funds in a divorce from a TSP soon. I don’t know how the best way to open an IRA, Roth or Traditional or even with who I open one with. When the funds are transferred, can I immediately start taking distributions monthly?