One-time penalty-free TSP withdrawal?


Q. During a retirement seminar, I was told that federal employees who retire during the year they turn 55 but before age 59½ have a one-time opportunity to withdraw funds from the Thrift Savings Plan without paying the 10 percent tax penalty. Is this correct? If so, how should this withdrawal be reported to the Internal Revenue Service so that the penalty is not assessed? I am a retired federal law enforcement officer, which may or may not be relevant.

A. This is bunk. If you retire during or after the calendar year in which you reach age 55, any and all of your TSP withdrawals are exempt from the early withdrawal penalty for the rest of your life. You should report this seminar provider to your agency to make sure that they get it right in the future.


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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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