Q. I have been reading your responses to the questions of federal agents and early withdrawals of their TSP accounts. The publication, 575, specifically states that law enforcement officers are exempt from the penalty if they are at least in their 50th year and the plan is a “qualified retirement plan.” IRS Form 8880 instructions refer to the TSP as a “qualified retirement plan” and in various other places within the IRS publications. Why do you insist it is not? Can you please clarify your position on this? Also, the IRS defines a law enforcement officer as one that is authorized to be armed, make arrests and serve warrants. Why are federal agents any different from nonfederal agents? I do not think your assessment of IRS publication 575 is accurate. Can you please educate me as to why federal agents are not exempt as other public safety employees?
A. The exemption only applies to withdrawals from defined benefit plans. The TSP is a defined contribution plan. I’m not your tax preparer, however, so you should consult yours before making any decisions.