TSP and in-service withdrawals


Q. I’m 58 yrs old with 34 years at the Postal Service. I have about $400,000 in my TSP account. I’m not ready to retire, but I would like to take a one-time withdrawal from my account to use for down payment of a house ($100,000). Is that money subject to a penalty? Do I have to pay it back? Or is it just treated like ordinary income?

A. You may take a loan up to the TSP loan limit, which will not be taxed if you repay it on time. You may take an in-service hardship withdrawal if you qualify, and you do not pay it back, but it will be taxed as ordinary income and subject to the early withdrawal penalty. You may wait until you reach age 59 ½ and take an age-based, in-service withdrawal, which you do not pay back and which will be taxed as ordinary income. Visit www.tsp.gov for more information about in-service withdrawals and loans.


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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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