Q: In a Dec. 13 blog post, you answered the following question: “I am a federal firefighter under CSRS Special Retirement due to retire in November 2011 at age 50. At what age will I be able to collect on my TSP retirement?” You said that the writer would be subject to the early withdrawal penalty until age 59 1/2 unless the withdrawal was rolled over, used to buy a life annuity or met one of the other “specific exceptions to the rule.”
I’m an 1811-series federal employee, age 52, and will be retiring in 2011. I’ve read that I can withdraw Thrift Savings Plan funds this year and will not incur the 10 percent early withdrawal penalty based on IRS Form 5329, Line 2, Exception 1: “Qualified retirement plan distributions (does not apply to IRAs) if you separated from service in or after the year you reach age 55 (age 50 for qualified public safety employees).”
Employees in the 1811 series, and I believe federal firefighters, meet the definition of “qualified public safety employees.” Please clarify: Would the above firefighter and I be able to withdraw TSP funds this year and avoid the 10 percent penalty under IRS Form 5329, Line 2, Exception 1?
A: Not as I understand it (remember, I’m not a certified public accountant and am not preparing your taxes) because: First, a federal firefighter is not included in the definition of qualified public safety officer, and second, the exclusion you mention only applies to early distributions from defined benefit plans, and the TSP is a defined contribution plan. Either of these facts alone will disqualify the exception. You may want to review IRS Notice 2007-7 for confirmation.
