How to Make a TSP Withdrawal (with pictures!)

The things I do for you guys!! Mrs. Barfield Financial decided recently she wanted a new car. And why shouldn’t she? After all, she’s not as privileged as me, to be tooling around town on an all-black Triumph Bonneville, Steve McQueen style. So off to the Honda store we go.

(You do know that the top 3 brands of cars millionaires drive are 1. Toyota 2. Honda and 3. Ford, right? You want to be a millionaire, drive these. Land Rover, Cadillac and Mercedes don’t even break the top 10!)

Since I don’t pay interest, and since this would be a good go-by for you guys to see how a TSP withdrawal is made, I decided to pull some of that good old TSP to pay for it. Technically, it’s not the wisest decision from a strict tax standpoint to pull out $50k for us this year, given my high tax bracket. But it won’t put me in a new bracket. And it represents a small portion of our gains last year. And this money has to come out sometime—it’s not for my kids! And next year won’t be any better. And…well, you get the picture. I don’t need to justify it to you.

Throughout the process I took a screenshot of each page that popped up as I navigated the withdrawal request. This should be as clear as I can make it. I highlighted the portions you need to confirm or click or be aware of in red circles. I also redacted any personal info since this is the internet.

Note that the TSP withheld the customary 20% in taxes. So my $50k request turns into an actual $40k hitting my bank. Since I’m in a bracket much higher than 20%, I’ll have to deal with the extra amount I’ll owe in federal and state down the road (but I deal with that by sending in quarterly payments already, regardless of this withdrawal. So no big issue for me. Some of you may not be accustomed to that process—talk to a CPA.)

Hopefully this is as clear as it can possibly be. I didn’t include the login screen. If you need the login screen, you probably aren’t ready to handle a withdrawal. Get some assistance.

So, without further ado, and with very limited commentary, I present to you a real world, step by step, documented, actual TSP withdrawal in the wild.

TSP WITHDRAWAL PROCESS

Once you log in, you’re confronted with this screen first. It would normally show my balance, but I’ve hidden it. As you guys know, I adhere to the Barbell Strategy, so my TSP leftover is just G Fund. The rest of it is residing nice and comfy in a private IRA. Where it sleeps well at night, and grows big and strong by day. That’s why the year-to-date return shown on this page is a mere 2.15%.

Remember, the red circle is what you’ll click on at each page to take you to the next:

You’ve got 3 choices here. We certainly ain’t buying an annuity! And I’m not taking ALL of it out, so the correct answer is “Partial Distribution”.

You’ll also notice (it’s sort of cut off at the bottom) that you have the option of taking installment payments. I’m not doing that. I’m doing a one-time withdrawal. But if you wanted to set up recurring, automatic monthly withdrawals, you’d pursue that section:

Remember that little quirk of the TSP—your spouse has to approve any withdrawals. In this case it won’t be a problem….Momma wants new wheels.

Remember, we aren’t rolling anything over. This isn’t a transfer. This is a withdrawal. Big difference. In a withdrawal, I actually get the money. It’s not going to some retirement account:

Enter the amount you want before taxes. I put in $50k:

Here you see the 20% deducted off the top:

Just confirming what bank account I want it to go to. You can have it mailed if you want:

Once Mrs. Barfield Financial signed off on it, the money hit the account the day after they processed it, or 6/27.

That’s it.

Only thing left is to adjust the ventilated seats, and heads up display to her liking.

Remember before you make withdrawals from your TSP, you need to be concerned with taxes, Possible early withdrawal penalties, whether you are taking out too much (i.e., a reckless amount), etc., etc., etc. Please speak to a professional about this. A CPA, CFP or someone that can educate you on these issues. The consequences of not knowing what you’re doing could be substantial!