TSP 536, Important Tax Information About Payments From Your TSP Account

Transcript

1 Important Tax Information About Payments From Your TSP Account Before making any decisions about withdrawing money from your Thrift Savings Plan (TSP) account, you should review the important information in this notice. Because tax rules are complex, you may also wish to speak with a tax advisor. The TSP can assist you with your withdrawal, but we cannot provide tax advice. You can find more information on the tax treatment of payments from retirement plans like the TSP in IRS IRS Publication 590, Individual Retirement Arrangements Pension and Annuity Income; Publication 575, and IRS Publication 721, Tax Guide to U.S. Civil Service Retirement Benefits. (See Section 6 of this notice (IR As); for information on how to get these and other documents.) withdrawals that comes from your Roth contributions. 1. Definitions and Other Important Note for those who receive automatic or matching Things to Understand contributions: All contributions from your agency or service go into your traditional balance, even those that To understand the tax implications of getting money out of matched Roth contributions . The Roth balance of your your TSP account, it’s important to know what we mean by account is divided between your contributions and the the following terms right from the beginning: earnings on those contributions, which may receive all “Distribution,” “payment,” and “withdrawal” • a different tax treatment, upon distribution, than the mean the same thing: money you receive from your contributions themselves, depending on whether the TSP account. distribution is “qualified.” means the money that contributions (yours “Earnings” • ◆ Qualified Distribution Defined and your agency’s or service’s if applicable) have earned If a distribution is “qualified,” it means your Roth while in your TSP account. It’s the difference between earnings are distributed tax-free. For a distribution your total account balance and the amount of your to be qualified, BOTH of these statements must be total contributions. true: • refers to various employer- “Eligible employer plan” 1. Five years have passed since January 1 of the first sponsored retirement plans, including those qualified year you made Roth contributions to your TSP under section 401(a) of the Internal Revenue Code, account. such as 401(k) plans, profit-sharing plans, defined 2. You are 59 ½ years of age or older OR you have benefit plans, stock bonus plans, and money purchase 1 a permanent disability OR you have died. (In plans; section 403(a) annuity plans; section 403(b) case of death, the 5-year requirement remains tax-sheltered annuities; and section 457(b) plans the same; your beneficiary does not have to wait maintained by a governmental employer. an additional 5 years for a withdrawal to be “Eligible rollover distribution” • simply means a type considered qualified.) of distribution from the TSP that the IRS allows to be If either requirement has not been met at the rolled over into another retirement plan or IRA. See the time of your withdrawal, then the distribution table at the end of this notice to see which payments is not qualified. So the earnings portion of fall into this category. refers to contributions you’ve elected to make “Roth” • 1 The TSP cannot certify to the IRS that you meet the Internal Revenue to your TSP account with pay that’s already been taxed. Code’s definition of a disability when your taxes are reported. Therefore, You do not pay income tax on the portion of your you must provide the justification to the IRS when you file your taxes. TSP-536 (10/2018) Previous Editions Obsolete Tax Notice

2 2 the payment will be taxed as income—and, 2. Do You Have Traditional, Roth, if you’re under 59 ½, may be subject to the or Both? (see Subsection 5b of early withdrawal penalty this notice) —unless you transfer or roll over If you have a TSP account, you fall into one of three the payment to a Roth IRA or Roth account categories: maintained by an eligible employer plan. If you Your entire balance is traditional. • do transfer or roll over the payment, you will not have to pay taxes (including the early withdrawal Your entire balance is Roth. • penalty) on the earnings at that time. Also, you will not have to pay taxes on payments that later • You have both a traditional balance and a Roth balance. become qualified distributions. (See Section 4 of this notice for information about transfers and If you have served in a Note for members of the military: rollovers.) combat zone, you might also have tax-exempt pay included in your account. Tax-exempt pay also must be designated • “Traditional” refers to everything in your account as Roth or traditional, so you still fall into one of the three that is not in your Roth balance. It includes all your categories. But it creates a special circumstance that we non-Roth contributions and any contributions made address in a note within each of the scenarios described here. by your employer, regardless of whether they were matching Roth or traditional contributions. You’ve deferred paying taxes on this portion of your account, If Your Entire Balance is Traditional so funds withdrawn from this part of your account are treated as income for tax purposes. The earnings on When you have no Roth money in your account, the tax your traditional balance are also treated as traditional. treatment of your withdrawals is very straightforward: All withdrawals are considered taxable income since you’ve “Transfer” and “rollover” • are the two ways you can deferred paying taxes on this money. This includes your move funds from one retirement plan to another. A contributions; your agency’s or service’s contributions, if any; transfer, sometimes called a “direct rollover,” is moved and the earnings. is first sent to you directly between accounts; a rollover before you deposit it into another retirement account Exception for tax-exempt pay: Traditional contributions (See Section 4 of this within 60 days of receiving it. you made from tax-exempt pay are not taxed when notice for more information.) withdrawn. But the earnings on those contributions are. All Withdrawals are Proportional If Your Entire Balance is Roth Another important concept to understand at the outset is If all of the money in your account is Roth, it’s separated that withdrawals are taken proportionally . For example, if into two pools: contributions and earnings. You’ve already the Roth balance makes up 30% of your total TSP account, paid income tax on the money you’ve contributed to your every withdrawal you make will be 30% Roth. And if that account, so withdrawals from this pool of money are not Roth balance contains 40% contributions and 60% earnings, taxed. The same is true of the portion of your withdrawal that then 40% of the Roth portion of your withdrawal will be comes from the earnings pool but only if the distribution is treated as contributions and 60% will be treated as earnings. qualified. (See “Qualified Distribution Defined” in Section 1 The same is true of tax-exempt pay and the earnings on of this notice.) contributions made from it. In summary, no part of a qualified distribution of Roth money is taxed under any circumstances. The earnings Tax Reporting portion of a nonqualified distribution is taxed and may be (see Subsection 5b of subject to the early withdrawal penalty We report all TSP distributions to the IRS, the appropriate this notice) unless you transfer or roll over the payment. state tax agencies if applicable, and to you on IRS Form Distributions From Pensions, Annuities, Retirement 1099-R, No difference for tax-exempt pay: In a Roth balance, tax- or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. exempt pay is treated the same as the rest of the balance. Distributions from beneficiary participant accounts will be In fact, once it’s deposited into a Roth balance, tax- reported as death payments on IRS Form 1099-R. exempt money becomes indistinguishable from the other contributions in the balance. Withdrawals of contributions

3 3 are not taxed, and the earnings are only taxed if the of withholding altogether. The chart at the end of this distribution is not qualified. booklet, “Tax Treatment of TSP Payments,” shows the withholding rates and the rules that apply to each type of TSP payment. If you are eligible and want to change the If You Have Both a Traditional Balance and a standard withholding, you may do so by completing the tax Roth Balance withholding section on your withdrawal request form. When you have both types of money in your account—Roth If you elect a post-separation “mixed withdrawal” (e.g., an and traditional—the approaches described in the first two annuity and a single payment), each type of distribution scenarios are applied proportionally. is treated separately and may be subject to different tax withholding rules. Let’s say your account has a traditional balance of $60,000 and a Roth balance of $40,000. And the Roth balance We do not withhold for state or local income tax. This does includes $15,000 in contributions and $25,000 in earnings. not mean that you don’t have to pay state and local taxes on You take a withdrawal of $1,000 from your account. You’re your distributions. We report all TSP distributions to your 57 years old and you do not have a permanent disability. You state of residence at the time of the payment (if that state has do not roll over or transfer any of your payment into another an income tax). See a tax advisor or state or local tax officials retirement account. What portion of this distribution is for specific information. considered taxable income? First, remember that all withdrawals are taken proportionally. 4. Transferring or Rolling Over Your Your account is 60% traditional, 15% Roth contributions, and 25% earnings on your Roth contributions. Applying those TSP Distribution percentages to your withdrawal means that the $1,000 you Before you decide to transfer received is made up of $600 from your traditional balance, or roll over your TSP $150 from your Roth contributions, and $250 from the Remember, transfers account, you should find out earnings on those contributions. go directly from the whether your IRA or plan TSP to your IRA or accepts transfers or rollovers; Your Withdrawal Your TSP Account eligible employer plan. the minimum amount it 60,000 $ $ Taxed as Income 600 Traditional Rollovers are payments will accept; and whether Not Taxed 150 Roth Contributions 15,000 $ $ you’ve received from the tax-exempt contributions Taxed as Income Roth Earnings 25,000 $ 250 $ TSP, which you then or Roth contributions, if $ 100,000 Total Total $ 1,000 deposit (within 60 days) applicable, will be accepted. to your IRA or eligible The traditional portion ($600) is all taxable. So are the employer plan. Keep in mind that the plan earnings included in your Roth balance ($250). That’s you choose to transfer or because you’re not yet 59 ½ years old, so this distribution is roll your funds into may be subject to tax treatment and not qualified. The same would be true if you were over 59 ½ plan rules (such as spousal consent rules) different from but five years had not passed since January 1 of the year you those that govern the TSP. The rules of the IRA or eligible first made a Roth TSP contribution. (See Subsection 5b of this employer plan that receives the rollover will determine your notice for information about the early withdrawal penalty.) The investment options, fees, and rights to payment. Specific portion that came from your Roth contributions ($150) is details concerning your Roth balance are explained later not taxable regardless of your age or the amount of time that in this section. has passed since you first made a Roth contribution. So the answer is that $850 of your withdrawal is considered taxable Not all types of distributions are eligible to be rolled income. It is also subject to the early withdrawal penalty over or transferred. Consult the table at the end of this unless you are covered by an exception. (See Subsection 5b.) booklet, “Tax Treatment of TSP Payments,” to see which types are considered “eligible rollover distributions.” 3. What We Withhold for Taxes The type of plan or account to which you can transfer or roll over your payment depends on whether the money you In most cases, we are required to withhold part of the transfer or roll over is from your traditional (non-Roth) taxable portion of your distribution for federal income balance or your Roth balance. tax. With certain types of payments, you may request an increase or decrease in the percentage withheld or a waiver

4 4 • If you roll over your payment from the traditional From a Traditional (non-Roth) Balance balance of your account into a Roth IRA, the full Eligible rollover distributions of your traditional (non-Roth) amount rolled over will be taxed in the current year. balance may be transferred or rolled over to a traditional IRA, an eligible employer plan, or a Roth IRA. Special note regarding tax-exempt money: We can only transfer tax-exempt pay to an IRA or eligible employer plan if the plan certifies that it accepts it. Not all of them do, so Transfers check with your IRA trustee or plan administrator. transfer part or all of your If you choose to have the TSP If you request a transfer of an eligible rollover distribution the following rules apply: eligible rollover distribution, from your traditional balance and that balance includes tax- • to The transfer of your traditional (non-Roth) balance exempt funds, we will always transfer money from the taxable not be a traditional IRA or eligible employer plan will portion of your balance first. This helps reduce the amount will be taxed in the current year, and no income tax of tax that you owe on any portion of the distribution that you withheld. You won’t be taxed on this money until you receive by check in the current year. We will only transfer eligible withdraw it from the traditional IRA or the tax-exempt money if your requested transfer amount is more employer plan. than the taxable portion of your account. If that’s the case, then we will do one of two things: • balance that Any part of your traditional (non-Roth) you transfer to a Roth IRA will be taxed in the current • If the IRA or eligible employer plan certifies that it year. No income tax will be withheld at the time of accepts it, we’ll transfer enough of your tax-exempt taxes to the transfer, so you may need to pay estimated balance to complete your request. mitigate your tax liability. not If the IRA or eligible employer plan does certify • that it accepts tax-exempt funds, we will send you, in Rollovers the form of a check, whatever portion of your request we could not fulfill with your taxable funds. If the TSP makes an eligible rollover distribution from your traditional balance directly to you and you decide to do a to a traditional rollover IRA, Roth IRA, or eligible employer From a Roth Balance plan yourself, the following rules apply: You may transfer or roll over an eligible rollover distribution Because we’re making the payment directly to you • from your Roth balance to a Roth IRA or a Roth account and not to your other retirement plan or IRA, we are maintained by an eligible employer plan that will accept required to withhold 20% of your payment for federal transfers and rollovers. Remember that the amount rolled income taxes. This means that in order to roll over your over will become subject to the tax rules that apply to the entire payment, you must use other funds to make up Roth IRA or the Roth account maintained by the eligible for the 20% withheld. Suppose, for example, that you employer plan. These tax rules are not identical to the rules took a $10,000 withdrawal and wanted to roll it over governing your TSP Roth balance. Differences include the to another retirement plan or IRA. We would withhold following: $2,000 and send it to the IRS. You would receive $8,000. If you wanted to roll over the entire amount of When you transfer or roll over your TSP Roth balance • your withdrawal, you would need to find $2,000 from into a Roth IRA, the starting date for satisfying the another source (e.g., other savings) and send it to the 5-year rule for qualified distributions does not carry other retirement plan or IRA along with the $8,000 over. Instead, you count from January 1 of the first year payment you received. you contributed to any Roth IRA. If you do not roll over the entire amount of your • You do not have to take a distribution from a Roth IRA • 2 the portion not rolled withdrawal within 60 days, during your lifetime; your Roth TSP balance, like your over will be taxed and will also be subject to the 10% traditional balance, is subject to required minimum (See early withdrawal penalty if you are under age 59½. distributions when you turn 70 ½. Subsection 5b of this notice for exceptions.) • Distributions from a Roth IRA can only be rolled over or transferred to another Roth IRA. The IRS may waive the 60-day rollover requirement in certain situations 2 if you missed the deadline because of circumstances beyond your control.

5 5 • Distributions from Roth IRAs are paid first from 5. Other Tax Rules contributions, then from earnings. a. Repayment of Plan Loans Transfers entire taxable distribution The TSP must declare a on the If you choose to have the TSP part or all of an transfer unpaid balance of your loan, including any accrued interest, if the eligible rollover distribution from your Roth balance, any of the following are true: following rules apply: You have failed to repay your loan in accordance with • The transfer of your Roth balance will not be taxed in • your loan agreement. the current year, and no income tax will be withheld. • You’ve missed a loan payment and have not submitted Subsequent distributions from your Roth IRA or Roth the amount needed to bring your payments up to date eligible employer account may be taxed and subject within the required time period. (see Subsection to the 10% early withdrawal penalty 5b) if that distribution is not qualified. (See “Qualified You have not repaid your loan in full when you separate • Distribution Defined” in Section 1 of this notice.) from federal service. • If part of your Roth balance is taxable (nonqualified This means that the IRS will consider the unpaid balance distribution) we will only transfer nontaxable money if of your loan to be taxable income. In addition, if you are portion of the withdrawal does not satisfy the taxable under age 59 ½, you may have to pay a 10% early withdrawal your transfer election. If you choose to have the TSP (See Subsection penalty tax on the taxable portion of the loan. of your payment, any taxable transfer only a portion Once a taxable distribution has been 5b of this notice.) portion will be transferred first. This helps reduce the declared, the loan is closed and you will not be allowed to amount of tax that you owe on any portion of the repay it. distribution that you receive by check in the current year. tax-exempt or If any part of your loan is associated with not , those contributions will be subject Roth contributions Rollovers to Roth to tax. However, the following conditions apply If the TSP pays an eligible rollover distribution directly to : earnings you and you decide to do a rollover to a Roth IRA or Roth • If the taxable distribution is declared because you’ve account maintained by an eligible employer plan yourself, the , only Roth earnings separated from federal service following rules apply: that are not qualified will be subject to tax. You cannot roll over any part of a qualified distribution • • another If the taxable distribution is declared for to an eligible employer plan. And you can only roll over (such as a default on your loan), the Roth reason the earnings portion of a nonqualified distribution. earnings included in the distribution will be subject See “Qualified Distribution Defined” in Section 1 of this ( to tax, even if you have already met the conditions ) These restrictions do not apply to rollovers into notice. necessary for your distribution to be qualified. (See Roth IR As. “Qualified Distribution Defined” under Section 1 of this notice.) • If your payment is not a qualified Roth distribution, the TSP is required to withhold 20% of the earnings If the taxable loan distribution was declared because you portion for federal income taxes. This means that in to roll it you may be able separated from federal service, order to roll over your entire payment to a Roth IRA or over (within 60 days of the distribution date) to an IRA Roth employer plan, you must use other funds to make or an eligible employer plan. If you have already spent the up for whatever amount we withheld. loan amount, you can still roll it over using other personal • The taxable part of a nonqualified distribution is treated funds. In other words, you would pay to the IRA or eligible the same as a distribution of your traditional TSP employment plan the amount that was declared a taxable balance: whatever portion is not rolled over is taxed and, distribution. If you are (See the rollover rules in Section 4.) if you are under 59 ½, subject to the early withdrawal able to do a rollover, you will defer income tax on any taxable See Subsection 5b of this notice for exceptions.) penalty. ( portion of the distribution. You will also avoid, if applicable, the additional 10% penalty tax for early withdrawals. Consult the IRS or a tax advisor for information and advice if your loan is declared a taxable distribution.

6 6 b. Additional 10% Early Withdrawal Penalty Tax c. Receiving Monthly Payments If you receive a TSP distribution before you reach age Participants receiving monthly payments may change the amount annually. If you elect to change the fixed dollar 59 ½, in addition to the regular income tax, you may have amount of your payments, if you transfer money into to pay an early withdrawal penalty tax equal to 10% of your account while receiving monthly payments, or if you any taxable portion of the distribution not transferred or change from payments based on life expectancy to a fixed rolled over. The additional 10% tax generally does not dollar amount, the withholding from the taxable portion of apply to payments that are your payment may change. The withholding rules will be paid after you separate from service during or after the • determined according to whether your new payments are year you reach age 55 (or the year you reach age 50 if eligible rollover distributions or periodic payments (based on you are a public safety employee as defined in section your account balance at the time the payment changes), and 72(t)(10)(B)(ii) of the Internal Revenue Code); whether the payment is taxable, tax-free, or a combination of the two. • annuity payments; In addition, changing from monthly payments based on life • automatic enrollment refunds; expectancy to a fixed monthly payment amount may make 3 made as a result of total and permanent disability; • you liable for the 10% penalty tax on the payments you previously received, if you do so within 5 years of beginning made because of death; • your payments or before you are age 59½. To learn more, see made from a beneficiary participant account; • and Annuity Income . Pension IRS Publication 575, made in a year you have deductible medical expenses • d. Required Minimum Distribution if You Are that exceed 10% of your adjusted gross income (7.5% 4 Over 70½ if you or your spouse is 65 or over); • If you are over age 70½ and are separated from federal ordered by a domestic relations court; or service, you must either withdraw your entire TSP account paid as substantially equal payments over your life • or begin receiving monthly payments by April 1 of the year expectancy. following the year you turned 70½. In addition, this April 1 date is the deadline for the TSP to start to distribute the This Roth Withdrawals and the Early Withdrawal Penalty: IRS “required minimum distribution,” a minimum amount penalty never applies to contributions you made to your Roth of the money in your account that you must receive each balance or to qualified distributions of Roth earnings. It may Important year. For more information, see the TSP tax notice apply to nonqualified distributions. Tax Information About Your TSP Withdrawal and Required Minimum Distributions. The penalty tax does Members of the uniformed services: not apply to any portion of a TSP distribution (including Beneficiary participants: Special rules apply to required a loan) that represents tax-exempt contributions from pay minimum distributions from beneficiary participant earned in a combat zone. accounts. To learn more, see the TSP tax notice Ta x Information About TSP Withdrawals and Required Minimum If you are a reservist called to duty for more than 179 Distributions for Beneficiary Participants. days, you may be eligible for relief from the 10% early received your TSP withdrawal penalty, provided that you e. Special Tax Treatment if You Were Born Before distribution between the date of the order or call and the close of the active duty period. You may also be eligible to January 2, 1936 repay the distribution to an IRA (not to the TSP). Consult If you were born before January 2, 1936, and you receive with your tax advisor, legal assistance officers, or the IRS your entire account in a lump sum distribution, you can regarding this relief. make a one-time election to calculate the amount of the tax on the distribution by using the 10-year tax option and 1986 tax rates. The 10-year tax option often reduces the taxes that you owe. To learn more, see IRS Publication 575, Pension and 3 The IRS may waive the 60-day rollover requirement in certain Annuity Income . The 10-year tax option does not apply to situations if you missed the deadline because of circumstances beneficiary participant accounts. beyond your control. 4 The TSP cannot certify to the IRS that you meet this exemption requirement when your taxes are reported. Therefore, you must provide the justification to the IRS when you file your taxes.

7 7 f. Rules for Nonresident Aliens or Beneficiaries of Nonresident Aliens If you are a nonresident alien and you do not have the TSP transfer your payment to a U.S. IRA or a U.S. employer plan, we are generally required to withhold 30% (instead of 20%) of the payment for federal income taxes. If the amount withheld exceeds the amount of tax you owe, you may request an income tax refund by filing IRS Form 1040-NR, U.S. Nonresident Alien Income Tax Return , and attaching Foreign Person’s U.S. Source Income your IRS Form 1042-S, . See IRS Form W-8BEN, Certificate Subject to Withholding of Foreign Status of Beneficial Owner for United States Tax Withholding , for claiming that you are entitled to a reduced rate of withholding under an income tax treaty. For more information, see also TSP tax notice Special Tax Withholding Rules for Thrift Savings Plan Payments to Nonresident Aliens, IRS Publication 519, U.S. Tax Guide for Aliens, and IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities. g. Death Benefit Payments and Court-Ordered Payments For information on the tax treatment of death benefit payments to an individual who is not the surviving spouse Important of a TSP participant, read the TSP tax notice Tax Information About Thrift Savings Plan Death Benefit Payments. For information on the tax treatment of court-ordered payments, read the TSP tax notice Tax Treatment of Thrift Savings Plan Payments Made Under Qualifying Orders. 6. Resources TSP publications are available at tsp.gov or by calling the TSP toll free at 1-877-968-3778 (TDD: 1-877-847-4385). Outside the U.S. and Canada, please call 404-233-4400 (not toll free). You can also send a fax to 1-866-817-5023 or write to the TSP at the address found on tsp.gov. IRS publications are available from your local IRS office, on the IRS website at www.irs.gov, or by calling 1-800-TAX-FORM.

8 3 8 3 3 3 No of your withdrawal request form. Yes—complete the withholding section No Not applicable of your withdrawal request form. Yes—complete the withholding section No Yes—complete line 1 of IRS Form W4-P. No Not applicable of your withdrawal request form. Yes—complete the withholding section No of Form TSP-25. Yes—complete tax withholding section May I Waive Withholding? 3 No Not applicable No Not applicable request form. of your withdrawal withholding section Yes—complete the No Withholding? May I Decrease 3 3 1 3 3 3 3 3 3 Yes—complete line 3 of IRS Form W4-P. of your withdrawal request form. Yes—complete the withholding section No of your payment method election form. Yes—complete the withholding section Not applicable of your withdrawal request form. Yes—complete the withholding section Yes—complete line 3 of IRS Form W4-P. of your withdrawal request form. Yes—complete the withholding section Not applicable of your withdrawal request form. Yes—complete the withholding section of your withdrawal request form. Yes— complete the withholding section of Form TSP-25. Yes—complete tax withholding section May I Increase Withholding? 20% 10% 20% 10% 20% money already paid Not applicable— 10% 20% 10% 20% None 3 dependents As if married with 20% 10% Withholding Rate? What Is the Tax Treatment for TSP Payments IRA Only to an “inherited” No Ye s No personal funds) Rollover only (using No Ye s No Ye s Rollover only No Ye s No Over the Payment? May I Transfer or Roll Payments will be reported for tax purposes by the annuity provider. The annuity provider will send information to participants about making a withholding election. distribution Eligible rollover payment Non-periodic distribution Eligible rollover payment Non-periodic distribution Eligible rollover payment Non-periodic distribution Eligible rollover payment Non-periodic distribution Eligible rollover distribution Eligible rollover payments Non-periodic distribution Eligible rollover distribution Eligible rollover Periodic payments Periodic payments distribution Eligible rollover distribution Eligible rollover payment Non-periodic for IRS Purposes Type of Payment 8 2 5 4 7 6 Annuity purchase Death benefit to a non-spouse participant account Death benefit from a beneficiary Restitution order (MVRA) IRS tax levy; or former spouse) Court order payment (not to current or former spouse Court order payment to a current default while still employed Loan taxable distribution— default by separation Loan taxable distribution— Financial hardship in-service withdrawal Age-based in-service withdrawal monthly payments Final single payment after a series of payments Required minimum distribution from a beneficiary participant account Partial withdrawal after separation or Automatic cash-out (less than $200) life expectancy table Monthly payments based on the IRS more (requested amount) Monthly payments for 10 years or years (requested amount) Monthly payments for less than 10 participant account separation or from a beneficiary Single payment full withdrawal after Automatic enrollment refund Type of TSP Payment Death benefits paid to a non-spouse are treated as non-periodic payments if they come from a beneficiary participant account. expectancy table. In these cases, taxes are based on withholding for a married person with 3 dependents, under the IRS withholding rules for periodic payments. Required minimum distributions are not treated as non-periodic payments (for IRS purposes) if they are part of monthly payments that are expected to be paid over 10 or more years or are part of monthly payments that are based on the IRS life Some versions of withdrawal request forms have tax withholding sections that should be completed in lieu of IRS Form W-4P, Withholding Certificate for Pensions or Annuity Payments. Withholding rules that apply to refunds of automatic enrollment contributions paid out as withdrawals using Form TSP-70 are based on the withdrawal option chosen on that form. Withholding only applies to the taxable portion of the payment (e.g., the earnings portion of a nonqualified Roth distribution.) If the payment is satisfying the IRS required minimum distribution amount, it is treated as a non-periodic payment. See the “Required minimum distribution payments” section of this chart. Payments are treated as periodic even if they are satisfying the IRS required minimum distribution amount. Court order payments made to a current or former spouse of a beneficiary participant are treated as non-periodic payments. 8 7 6 5 4 3 2 1

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