Withdraw TSP fund without penalty


Q. I am taking VIRA/VSIP and am age 53. I have 26 years time in service and my minimum retirement age with 30 years of service is in 2015 at age 57.  When can I access my TSP funds without being subject to the 10 percent withdrawal penalty?

1. Most literature indicates that if you retire early in the year 55 or later, you can withdraw immediately without penalty.

2. The TSP board (I called twice already) says only 59½.

3. The FERS handbook states you can withdraw without penalty at MRA with 30 years (my case 57).

I would think that an early out would qualify me for immediate withdrawal.

A. Your service time and reason for retirement have nothing to do with the IRS early withdrawal penalty. Since you are retiring before the year in which you will reach age 55, you will be subject to the early withdrawal penalty until you reach age 59 1/2 unless you qualify for one of the exceptions listed on page 4 of the notice at https://www.tsp.gov/PDF/formspubs/octax92-32.pdf.



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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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