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…
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.
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.