TSP penalty due to wrongful termination


Q. I was wrongfully terminated from federal service in 2010. The case was settled out of court, after seven months. During that time I was no longer in Civil Service and could not legally contribute to my TSP and, seeing I had no income, I removed my TSP so that I could continue to pay bills and maintain my mortgage. I was 50 years old at the item of the wrongful termination, I have paid the required taxes, but now I am subject to the penalty due to no fault of my own. As part of the agreement with the Air Force, they paid me my back pay. I secured employment elsewhere during the seven months of ligation. Is it possible to get relief from the penalty? I really had no choice.

A. There is no exception to the early withdrawal penalty for anything you’ve mentioned in your description. You may want to consult a CPA to be sure, however.


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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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