Hello again Mustachians,
I'd like to update this thread with some news. Now, at the age of 25, I have $70k in my TSP and IRA (both Roth), and by the end of 2016 I will have a hair over $90k depending on the market. A simple calculation suggests that, if my money compounds at a real rate of 7% annually, I will have over $1.2M at the age of 65, so my retirement will be fully and totally funded. Awesome, right?
Here's the problem. $90k in principle is barely enough to live for six years frugally, so even the 5 year pipeline won't help me very much. The only way it will help me is if I roll part of my Roth TSP into my Roth IRA, and that somehow counts as a principle contribution, then I'll have enough to fund an early retirement. The SEPP should give me the ability to withdraw up to 2.5% or so of my Roth TSP per year, which falls well short of what I will need to fund my retirement if I use the 4% rule.
Sure, I could keep putting money into my Roth TSP and Roth IRA until I am at a point where the 4% rule comes into play, but this won't help me much as I will have to pay a 10% tax on any withdrawals of interest from my Roth IRA, and a 10% tax on any withdrawals at all from my Roth TSP.
So, how should I keep contributing money to my Roth TSP and Roth IRA, or contribute to non tax-advantaged funds to hold me over until I'm 65? Should I hold fast to the 4% rule, or should I account for the 10% penalty tax? How helpful is the SEPP really when all it is is effectively a 2.5% withdrawal? And how can I roll Roth TSP into a Roth IRA? I have found precious, precious little information on the last topic especially, and no forms or guidance how specifically it can be done.
Any advice is appreciated. Cheers all.