Exemption from TSP early withdrawal penalty


Q. I am working, waiting for approval of disability retirement under FERS. Will I be penalized 20 percent if I withdraw my Thrift Savings Plan in lump sum when I am approved for disability? I was diagnosed with Stage II multiple myeloma in May.

A. The exemption from the early withdrawal penalty to which you are referring is for a distribution taken as a result of a total and permanent disability. The TSP cannot certify that you qualify for this exemption and it is up you, or your tax preparer, to demonstrate that you meet this exemption.


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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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