Q. I am a federal air technician with the Air National Guard. I have been a federal full-time technician since June 10, 1991. I bought back my Air Force active duty time from 10 Dec 86 – 9 Mar 91. I am in FERS and have a minimum retirement age of 56 years and 2 months. I will be 53 next year. It has been communicated to me that I will probably not be retained next year, meaning that May 13, 2019, I will be involuntarily retired, thus losing my full (technician) and part-time (traditional Guard) employment. I will be four months shy of age 54. When can I begin collecting from my Thrift Savings Plan? I would like take a partial amount and pay off my house, and leave the rest in my TSP. Is this a good idea? What are the penalties, or should I wait until 59 1/2 to collect from my TSP? I know I will start collecting on my FERS retirement right away and will have to wait until 56 years and 2 months for the supplement (correct me if I’m wrong).
A. Since you are separating from TSP-covered service during or after the calendar year in which you reach age 55, you will be able to withdraw funds from your TSP account, without penalty, as soon as the TSP receives notice of your termination. Whether or not using your TSP money to pay off your mortgage is a good idea will depend upon the cost of your mortgage, the tax code, the future value of your home, and how your TSP account performs in the future, among other things. There is no simple answer.
