Penalty-free TSP withdrawals?


Q. I am turning 50 years old next year and want to retire as a Federal Law Enforcement Officer with 24 years of service. Can I, under the 72t rule, withdraw an equal substantial sum for 10 years and not pay an early-withdrawal penalty? For example, if I have $10,000 in TSP, can I take $1,000 each year for 10 years with no penalty to supplement my income?

A. You may avoid the early withdrawal penalty by taking as series of Substantially Equal Periodic Payments that continue until you reach age 59 1/2, but you must take exactly and only the amount calculated using one of three available calculation methods (life expectancy, annuitization or amortization). You should seek professional guidance before going down this path. The rules are complex and strict, and the penalty for violating them can be severe.


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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 and view his blog at

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