To avoid TSP penalty, follow IRS rules to letter


Q: I am planning on retiring next month when I turn 50. I would like to take monthly installments based on the IRS life expectancy tables to avoid the 10 percent penalty for early withdrawal. Would I still be able to make a withdrawal for my son’s college fees and still avoid the 10 percent penalty?

A: You’re planning to use the life expectancy method for calculating withdrawals that will satisfy the exception to the early withdrawal penalty. This exception is allowed under IRS code section 72(t). One of the requirements for meeting this exception is that exactly the correct withdrawal amount must be taken each year, no more, no less. You can find more information from the IRS here.


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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 and view his blog at

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