TSP Monthly Allocation Tax Rate

THE THRIFT SAVINGS PLAN ALLOCATION GUIDE Forums Message Board TSP Monthly Allocation Tax Rate

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    I am planning on retirement and would like to withdraw a set monthly TSP amount as part of my retirement. I was wondering how I can calculate the tax rate on the withdrawed funds so that they can included in the withdraw amount when calculating the monthly “cash in hand” amount…

    Thanks in advance…



    Hi Pat,

    When I recently spoke to someone from the TSP Service Center the answer she gave me to your question, when I asked the same question a few months ago was that 20% is the mandatory tax rate to be withheld from any withdrawal made from any of the tax deferred funds. (i.e. Non-ROTH investments.) For example, from a $25 per month withdrawal, $5 will be withheld; $300 per month withdrawal, $60 withheld. Keep in mind though that the 20% rate may be offset by your effective tax rate or adjusted gross income amount when you file you tax return. I’m also learning these things as I go and you should ask your tax preparer, CPA, or accountant for the most reliable information on that subject. Hope that helps and I wish you well.

    Joe Warner

    That is interesting facts you gave. 20 percent seems very high rate. i am sure it is right as that is what the government withhold from any cash award I get; but, it seems high. In excel I put in the current tax rate, I get a marginal tax rate of 15% for what I would take out from TSP.

    I’ll bring this question up at the next retirement seminar at the lab which is in a couple of weeks and see what answer the retirement seminar guy gives.

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