TSP and retirement


Q. I have read many of the articles and TSP literature and I am still a bit confused. As a federal law enforcement officer over age 55, I plan to retire later this year. I have read that if I want to take withdrawals from my TSP account prior to age 59 ½, I can do so without having to pay the 10 percent IRS penalty for early withdrawal, so long as I do it in an annuity (not interested) or, based on life expectancy (not interested as it provides more funds than I want at the beginning of my retirement), or as “substantially equal periodic payments. (not sure who determines this payment, me or IRS).

My questions:

May I set the amount of the monthly payment, say $1,000 each month, and so long as I maintain that same payment amount each year until age 59 ½ or for five years, whichever is the later (in my case the five years)?   If yes, will I still avoid the IRS early withdrawal penalty?

May I change the amount of the monthly payment (increase or decrease) prior to turning age 59 ½ or five years, whichever is greater and still avoid paying the 10 percent early withdrawal penalty?

A. As long as you retire during or after the calendar year in which you reach age 55, you will not have to worry about the early withdrawal penalty, since it will not apply to you. You will have access to your TSP account through the various options offered by the TSP without further restriction.





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.


  1. Mike,

    What are the answers to the above questions if under age 55? For instance, taking a early retirement option at age 53 — how would the TSP 10% penalty apply using the original scenarios in the question??


  2. Cannot Wait Till 55 on

    Can I STOP working for Federal Govt before 55, yet not touch TSP until 55 and then start withdrawing money from TSP?

    Generally, what are the differnces between “retiring” and “stopping working”

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