Q. I retired after 26 years of active military service at the age of 52. I’m now 61 years old. I would like to withdraw all the funds in my TSP account for use in various home improvement projects. Am I subject to a 20 percent income tax and 10 percent early withdrawal penalties?
A. Any withdrawals from the TSP after age 59½ are exempt from penalty. They will be considered ordinary income, for tax purposes, in the year in which they occur. The tax withholding required will depend upon how you take the money. The rules are explained in the table on page 3 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf.