Q. I am a FERS employee with the U.S. Postal Service. I plan on leaving this summer when I’m 58. I have read that I can be less than 59½ years old to withdraw from TSP and not be penalized for early withdrawal, as long as I am completely separated from USPS. Is this true? Also, along with my pension, I plan on with drawing about $1,200 per month from my TSP. Will I be taxed less by taking out monthly amounts than if I took out the entire amount?
A. Under the circumstances you describe, you will not be subject to the early withdrawal penalty on your post-separation TSP withdrawals. The amount of tax you’ll owe on your withdrawals can only be determined by completing tax returns for the year or years when the withdrawals are received. See the table on Page 3 of the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf for an explanation of the rules covering tax withholding from TSP withdrawals.
