Avoiding TSP withdrawal penalties


Q: I am a postal worker for 23-plus years of service. I am 45 years old. Is there a way to withdraw all my Thrift Savings Plan funds without penalties? If I can do this, I can bring down my mortgage and not be in a foreclosure situation. I do remember that President Obama, in his campaigning days, promised we could withdraw from our retirement funds. What happened to that?

A: As an active employee, you would only be able to withdraw funds from your TSP account under the financial hardship allowance. Your withdrawal will be subject to penalty, however, unless you can qualify for a disability or other exception. The rules involved in 1. accessing your TSP as an active employee, and 2. avoiding the early withdrawal penalty are complicated and should be carefully reviewed before proceeding. You’ll find what you need to know at http://www.tsp.gov.


About Author

Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to fedexperts@federaltimes.com and view his blog at money.federaltimes.com.

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