By Dorothy Ramienski
Internet Editor
FederalNewsRadio

With all of the talk about the markets going up and down, some of your questions about what to do with the money once it’s available might have gotten lost in the conversation.

On Monday’s Daily Debrief, the TSP’s Tom Trabucco talked with Christopher Dorobek and Amy Morris about some frequently asked questions that TSP participants have had recently.

Trabucco first broke down how one can go about taking money out of his or her retirement fund.

“There are rules for in-service withdrawls versus what we consider post separation withdrawls. . . . We have two types of in-service withdrawls — the first is age based and what that basically says is once you’ve reached age 59 and a half, you can take whatever you want out of your TSP in a one time full or partial withdrawl. . . . The other type of in-service withdrawl we have is a hardship withdrawl and that’s gotten a fair amount of use over the last year.”

Trabucco says, in 2008 alone, the TSP paid out money to 111,000 participants who used hardship withdraw.

That’s not all. Trabucco says, while the hardship withdraw have been steadily increasing over the years, the TSP reached another milestone last year: over one million withdrawls period.

These, he notes, were payments of all kinds: monthly, in-service and after service.

“For participants who want to withdraw their funds after they separate from service, we have three basic types: you can take a single payment, you can take monthly payments or you can have us purchase an annuity for you. There’s also a cash out provision, but that only applies to amounts of $200 or less.”

Trabucco says many of the rules that govern TSP withdrawls mirror those that relate to private sector funds.

In fact, he notes, some of the rules for TSP participants make moving money around a bit easier when compared to the private sector.

In the case of divorced spouses, for example, Trabucco says OPM tries to keep it simple.

“If it’s a defined benefits program, it’s generally a continuing monthly payment that you get, and arrangements have to be made when there’s a divorce affecting that, that provides for payments to the former spouse, as well as payments to the individual. Essentially, the court orders some type of division of those and it’s an on-going stream of payments, but for the TSP, since it’s an amount of money on account that can be calculated at the time of the divorce, the court would normally divide the amount of money and a payment is made to the divorced spouse.”

The TSP understands that there are a lot of ins and outs when it comes to planning for retirement, which is why there is an entire Web site page devoted to FAQ’s.

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