By Mike Miles
December 20th, 2010 | Uncategorized
Q: I am retired military, and I want to withdraw the full amount of my Thrift Savings Plan account. Will I pay the tax and penalty immediately, or will I pay when I file my 2011 taxes? I have about $14,000 in my TSP. In other words, will I recieve the full amount or will it be taxed first?
A: You won’t actually be required to pay the tax and penalty until you file your return, but the TSP will withhold 20 percent from your payment as a deposit against future liability. You may not reduce this withholding, but you may elect to have more withheld.