By Mike Miles
October 29th, 2014 | early withdrawal penalty
Q. I have recently retired from active-duty military. I am also a federal employee and upon retirement from the military I returned to my federal job. I transferred my military TSP to my federal TSP. I am 53 and I had planned to continue working until age 56, at which time I would retire from federal service as well. I am considering leaving my federal position due to health issues. Can I take a one-time withdrawal from my TSP without penalty or do I have to retire from my federal job as well? Read the rest of this entry »
October 28th, 2014 | TSP withdrawal
Q. I will take a discontinued service retirement in September and I am going to take a full withdrawal of my TSP ($40,500) as soon as I can. Will I be charged the penalty and what percentage will they take out? I am 56 with 27 years of service.
A. If you separate from federal service during or after the calendar year in which you reached age 55 there will be no early withdrawal penalty assessed. Twenty percent of your payment will be withheld as a deposit against your federal tax liability for the year, unless you request a larger amount.
October 27th, 2014 | TSP withdrawal
Q. I am totally and permanently disabled by the VA due to service-connected disabilities. Can I withdraw some of my TSP without the 10 percent penalty? I’ve done some research and all I can find is the 10 percent penalty does not apply to people with total and permanent disabilities, but all the literature implies this rating comes from the Social Security Administration.
A. The TSP does not levy the penalty. You must convince the IRS that you meet the disability exemption requirement. You are permanently and totally disabled if you cannot engage in any substantial gainful activity because of your physical or mental condition. A qualified physician must certify that the condition has lasted or can be expected to last continuously for 12 months or more, or that the condition can be expected to result in death.
October 6th, 2014 | TSP withdrawal
Q. Can I withdraw from my TSP if I accept a VERA with 30 years of service and my age is 47, or is there a penalty? If so, how much?
A. If you separate from service before the calendar year in which you reach age 55, you will be subject to an IRS 10 percent early withdrawal penalty unless you qualify for one of the exceptions listed on Page 7 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf.
September 15th, 2014 | TSP withdrawal
Q. I have 36 years of FERS service with retirement at MRA 56 and four months. If I wanted to take a partial withdrawal of TSP at retirement (early withdrawal, before 59.5), do I have to elect to do this immediately when I retire or could I wait a year and request this?
A. You may wait as long as you like.
Tags: early withdrawal penalty
September 3rd, 2014 | L Fund
Q. I’m a 40-year old mailman with 17 years service. I plan on leaving the post office when I hit 52 (30 years service). I understand I need to leave my TSP alone until 55 without penalty. My house will be paid off before I’m 51. I plan to work part-time with less stress after 52. I have $91,000 in traditional TSP now ($15,000 in L2030), the rest in G fund. I just switched from 10 percent to 15 percent payroll withdrawal. Should I change my contribution to 100 percent going into L fund, or remain with my current 70/30 split in favor of the G fund? Read the rest of this entry »
August 21st, 2014 | TSP withdrawal
Q. I am an operations manager for the FAA covered under CSRS. I plan to retire Dec. 31, 2016, at the age of 55 with 34 years of service under the controller bill. Can I make a total withdrawal from my TSP in 2017 without paying the 10 percent early withdrawal penalty?
July 24th, 2014 | TSP withdrawal
Q. I am a retired law enforcement officer with 25 years of service. I retired from the Bureau of Prisons in December 2009 at age 48. I am receiving my pension and the supplemental annuity. I have $300,000 in my TSP account and want to start withdrawing it. What are my options to begin receiving money from the TSP without buying an annuity and not having to pay the 10 percent early withdrawal penalty? Can I take a one-time distribution of say $100,000 without penalty? Can I withdraw the whole amount without penalty? Can I take $2,400 per month out which will last for at least 10 years or do I have to use the IRS life expectancy formula? Am I exempt from this penalty as a qualified public safety employee or special category employee? Read the rest of this entry »
July 21st, 2014 | TSP withdrawal
Q. Can I take my money out of the TSP and pay the penalty? Is there any way to get all my money out without having to retire or quit? If so, can I then move it into another self-directed IRA?
A. The only ways to remove money from your TSP account before reaching age 59-1/2 while you are still a federal employee are: a loan and/or an in-service financial-hardship withdrawal. Neither of these may be rolled into an IRA account.
July 9th, 2014 | TSP withdrawal
Q. I’m 26 and I’m planning to get out of the Army next year. If i withdraw all the money and stop my TSP account after leaving the military, would I be charged for anything? If yes, what would it be ?
A. You will be subject to income tax and the 10 percent early withdrawal penalty unless you qualify for one of the exceptions on Page 7 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf.
Tags: early withdrawal penalty