Military retirement planning with First Premier Bank, one due date at a time

Stacked income and a pre-tax TSP

$220K. That's $80K of retired pay plus a $140K salary, all ordinary income before a dollar leaves the TSP. Retired pay is fully taxable federally and shows up on a 1099-R from DFAS each January.

Now add the TSP. Colleen, a hypothetical 54-year-old retired Coast Guard commander and hospital emergency-management director, has $780K in it, mostly traditional. It keeps growing while both incomes run. At 75 (the age for anyone born in 1960 or later) it meets required minimum distributions, stacked on a pension that never stops and Social Security that can be up to 85% taxable.

Officers and senior NCOs who retired at 20+ years and walked straight into a salaried civilian job usually land here. The moves mostly shift tax into years with less income stacked on top. Tax doesn't vanish; the value is in the timing.

How many low-income years do I get before 75?

If Colleen leaves her hospital job at 62 and claims Social Security at 70, she gets 8 window years, ages 62 through 69; if she works to 67, she gets only 3. A window year is a year with retired pay but no salary, before RMDs begin at 75.

Hypothetical: Colleen, born 1972, has $80K a year of retired pay (held flat for illustration) and a $140K salary. Her RMDs start at 75, and she plans to claim Social Security at 70. First Premier Bank sets the retirement date question first, because it decides how long the window is.

In each window year she takes $29K of income draws from her traditional TSP. Retired pay of $80K plus $29K puts AGI at $109K. The $16,100 single standard deduction for 2026 leaves taxable income of $92,900. From 65 on, Medicare looks at that AGI, and Part B stays at the $202.90 standard premium.

Now the totals. 8 years × $29K = $232K out of the pre-tax TSP; 3 years × $29K = $87K. The gap is $145K. At about 4% of the balance, that trims her first RMD by roughly $5,800 before growth.

Whether those draws are taxed at lower rates than RMDs would be depends on future law and on her income then. And the invested TSP can lose value, including money she originally contributed.

Colleen's window years

What the gap is worth

The yearly review and what sets off an extra one

The regular review runs each January, when the DFAS 1099-R and the hospital W-2 arrive. We check withholding, the size of the TSP draw and the Medicare IRMAA tier. A job change, the cost of Colleen's mother's care rising, a COLA notice that lifts retired pay, or a decision to leave work earlier each trigger an extra pass. Each review ends with one decision, the next one by due date, with its numbers beside it.

Do I have to settle Social Security timing first?

No, but it comes early, because the age you pick for Social Security decides how long your window runs. Full retirement age is 67 for people born in 1960 or later, and claiming then ends Colleen's window 3 years earlier than waiting to 70. We cover the claiming decision in detail on a separate page.

Taxes now. Her prior-year FICA wages of $140K sit under the IRS $150,000 line, so she still chooses Roth or pre-tax for the $8,000 catch-up in the hospital 403(b). From 60 to 63 the higher $11,250 catch-up applies. These are the 2026 IRS limits.

Estate documents. The TSP-3 beneficiary form and IRA beneficiary forms override a will, so we check them whenever the will changes, especially with a parent living in the home. First Premier Bank keeps these 3 on one roadmap so a change in one shows up in the others.

The table uses one assumption: a single retiree born after 1960 with retired pay and a second-career salary, on 2026 figures. Read it row by row; each row is a due date, not a suggestion.

Taxes and catch-ups now

Beneficiary forms

Who files, who advises, who holds the money

Five parties touch this work, and each has one job.

• You: send the 1099-R, W-2 and TSP statement each January and decide the retirement date.
• First Premier Bank: runs the window math, sets the yearly draw amount and writes the roadmap with due dates.
• CPA: prepares the return, confirms filing status and any estimated payments.
• Attorney: drafts the will and powers of attorney.
• Custodian: the TSP or IRA custodian processes draws and beneficiary forms, and First Premier Bank checks that each matches the roadmap.

Can I wait until RMDs to deal with this?

You can, but it costs window years. Every year you wait after the salary stops is one fewer low-income year, and doing nothing until 75 leaves the whole pre-tax balance to come out as RMDs on top of retired pay and Social Security. In Colleen's case each lost year is $29K that could have left the TSP at $109K of AGI.

What you can check yourself before calling First Premier Bank

Two checks take an evening. Count your window years: the age your salary ends, up to the age you'll claim Social Security, and look up your RMD age from your birth year. Then add retired pay and salary from last year's 1099-R and W-2, and compare that total with your myPay withholding.

Call First Premier Bank when the window is under 10 years away, the TSP is mostly traditional, or a one-time expense is on the table. Paying off a mortgage with one $130K TSP distribution at 63 looks prudent. It lifts that year's AGI to $210K with $80K of retired pay, and the Part B premium at 65 lands at $649.20 a month instead of $202.90, about $5,356 more for the year, plus the whole $130K taxed at once.

Where this stops: we don't prepare your return; that stays with your CPA. And if you're still on active duty with a small TSP and 15+ years before a second career ends, the window math is too far off to be worth paying for yet.

We name the fee openly when we first talk, and you get it in writing before any work starts. The office is in San Diego; we meet with clients by phone or video.

Two checks to run alone

When a call is worth it