Full TSP withdrawal and tax implications


Q: I am a federal firefighter with a mandatory retirement at age 57. I plan to retire soon and I plan to completely withdraw all of my Thrift Savings Plan funds and move to a South America with a full withdraw option in one payment. How much of a tax hit can I expect to take by doing this, and is this taxed as ordinary income, as well, for the year?

A: Your withdrawal will not be subject to the early withdrawal penalty, but will be subject to mandatory 20% tax withholding. Funds withdrawn from the TSP are considered ordinary income for tax purposes.


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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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