Disability retirement

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Q. I am 56 and had to retire under a federal service disability retirement because of cancer. I am also receiving Social Security, and I have 90 percent disability from the Veterans Affairs Department. Can I withdraw from the Thrift Savings Plan without the 10 percent penalty, or do I need to wait until I’m 59? I’ve read that if I am permanently disabled I can waive the penalty. But I can’t find any info as to how I prove permanent disability for tax purposes. I know I can’t work and retired with disability under federal service and Social Security, but is that permanently disabled? The tax documents bounce all over, and it’s difficult to know if I meet the permanently disability requirements.

A. If you haven’t already, look at page 7 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf.

From page 57 of IRS Publication 590:
“You are considered disabled if you can furnish proof that you cannot do any substantial gainful activity because of your physical or mental condition. A physician must determine that your condition can be expected to result in death or to be of long, continued, and indefinite duration.”

 

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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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