By Mike Miles
June 10th, 2013 | Uncategorized
Q. I am a Postal Service employee who has civil service retirement and has been on workers’ compensation for several years now and probably will not go back to work. Can I get my Thrift Savings Plan money now as payments or do I have to retire first? Also, how can I add money into my TSP if I can’t take it out?
A. As I understand it, unless you have separated from covered service, you will be subject to the TSP’s restrictions for in-service withdrawals. You should call the Thrift Line to be sure, however.
January 21st, 2013 | Uncategorized
Q. I have a friend who has been receiving workers’ compensation benefits for about 25 years but is not yet separated from service and worked under CSRS. Can he apply to the Office of Personnel Management to receive the monies in TSP in a lump-sum payment without having to retire? Or will he have to apply for disability retirement first?
A. As long as he is employed, the in-service withdrawal rules will apply.
August 23rd, 2011 | Uncategorized
Q. I stopped work in March 2009. I applied for OWCP. The Office of Workers’ Compensation Programs had paid for two back surgeries in 1989 and 1991 and continues to pay for ongoing treatment. I was denied OWCP, so I applied for disability retirement, which was approved. I am still on interim retirement pay. I withdraw some funds from my Thrift Savings Plan to cover me for the time period between OWCP and retirement. I now need to withdraw more for medical reasons. Since I am medically disabled from my federal position, as well as medically retired, what is the best way to withdraw my Federal Employees Retirement System TSP monies?
A: From the notice posted at https://www.tsp.gov/PDF/formspubs/octax92-32.pdf:
“If you receive a TSP distribution before you reach age 59½, in addition to the regular income tax, you may have to pay an early withdrawal penalty tax equal to 10% of any portion of the distribution not transferred or rolled over. The additional 10% tax generally does not apply to payments that are:
* Paid after you separate from service during or after the year you reach age 55;
* Annuity payments;
* Automatic enrollment refunds;
* Made as a result of total and permanent disability;
* Made because of death;
* Made from a beneficiary participant account;
* Made in a year you have deductible medical expenses that exceed 7.5% of your adjusted gross income;
* Ordered by a domestic relations court; or
* Paid as substantially equal payments over your life expectancy.”
The TSP cannot certify to the Internal Revenue Service that you meet these exemption requirements when your taxes are reported. Therefore, you must provide the justification to the IRS when you file your taxes.