10% penalty waived if permanently disabled with TSP

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Q.  I have just been granted a medical disability from civil service, and I would like to withdraw some money from my TSP account. I would like to know if the rules apply for TSP like they do for an IRA account in waiving the 10 percent penalty if you have a permanent disability.

A. Yes, the “totally and permanently disabled” exemption from the early withdrawal penalty does apply to the TSP.

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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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