Early withdrawal penalty


Q. The Internal Revenue Service is penalizing me for withdrawing my Thrift Savings Plan. I am less than 59 years old, but I retired under a Voluntary Early Retirement Authority. It is my understanding that I do not have to pay an early withdrawal penalty because I am retired. Please correct me if I am wrong. I also need to find the regulations for the IRS if I am exempt from paying this penalty.

A. Unless you retired during or after the year in which you reached age 55, or meet one of the other special exceptions, your withdrawals will be subject to the early withdrawal penalty until you reach age 59½ . See Page 7 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf for details.


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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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