Early withdrawal penalty


Q. I have retired from the United States Postal Service because of disability. I want to do the one-time withdrawal of $60,000 and monthly annuities of $1,000 dollars. I have $318,000 in TSP. I am also a 100 percent disabled service-connected veteran. Will I be charged the 10 percent early withdrawal penalty from the IRS? My monthly annuities will last well into my 60s. Also, what is the special retirement supplement?

A. Disability is one of the exceptions to the early withdrawal penalty. (See page 7 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf) Keep in mind that the IRS collects the early withdrawal penalty and it’s the IRS that must be satisfied that you qualify for an exception.


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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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