Re: [TSPStrategy] Maybe leaving the TSP

You are correct  RMD is 7 years out. The Tax Cut Jobs Act of 2017 set in place lower tax rates for the middle income brackets. Those breaks end in 2025. No ones knows if the rates will return to the Max 39% tax rate for upper brackets or not. Or if the rates go up proportional or at all. 

So in planning I'm guessing that I would rather pay tax now at a lower rate than potentially suffer a higher bracket when RMDs kick in especially after 2025. 

So I was thinking a roll over from TSP to traditional IRA, once a year then a conversion to Roth (paying tax at today's discount) would save me money.  What ever will still be left in TSP after I turn 72 will be less and taxes in RMDs total income increases will be less after 2025. 

Sky

831 262-8044

On Feb 10, 2021, at 11:00 AM, winfield100 via groups.io <winfield100=yahoo.com@groups.io> wrote:



I thought your RMD doesn't kick in until age 72 from TSP (new rules)

On Wednesday, February 10, 2021, 12:31:04 PM EST, Sky Paxton <sky@familystones.net> wrote:

All in or out aside, ( btw I went all G in Jan) I'm looking for advice.

I turn 65 this year. It won't be long before Required Minimum Distributions kick in. I've been retired since 55 and taking out a modest 3k a month since I retired yet due largely to our many blessings and advice from this group the tsp balance has significantly increased.

My questions should I take large distributions out every year now until I'm 70 to take advantage of the favorable tax law or wait and see what the new tax rate will be in 5 years?

If I take the large distribution every year now(leaning this way), should I roll it into an IRA then convert to a Roth?  There will be a significant amount to leave to my heirs unless something dramatic changes?

Thanks and Blessings to all,

Skyler