By Mike Miles
Withdrawing from TSP account
November 23rd, 2009 | Uncategorized
Q: I am an employee (Federal Employees Retirement System) at a BRAC-ed installation. Sometime around September 2011, I will be fired. At 56 years old — the age at which I’ll have 29 years’ service — I can retire. I would like to cash in my Thrift Savings Plan (approximately $156,000), collect on my rolled-over leave ($54,000), collect on 50 percent of my sick leave ($17,000), collect my $25,000 and pay off all my debt. I’ll live on my pension and offset. Can I take out all my TSP funds, and what is the tax bite if I should do so?
A: Since you’ll be separating from FERS service during or following the year in which you reach age 55, you’ll be able to withdraw funds from your TSP account without penalty. The amount you withdraw will be added to your tax return as ordinary income. The tax you pay will depend upon your tax return for the year in which you take the withdrawal.
Tags: separating, tax, TSP, withdraw