Avoiding penalty on TSP withdrawal


Q. I’m retiring from the military at age 52 after 30 years of service. As I understand things, I can’t withdraw my Thrift Savings Plan funds without a penalty until age 59½ (except as an annuity or equal payments based on life expectancy). What if I go to work for the government as a civilian until age 55? Then, could I withdraw the whole amount without penalty? Is there a certain length of time I must spend as a civilian federal worker?  What if I only worked for the government for three months during the year I turned 55? Is that sufficient to qualify for penalty-free withdrawal?

A. The rule to avoid the penalty on TSP withdrawals is that you must separate from covered service during or after the year in which you reach age 55.


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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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