TSP withdrawals after taking VERA at age 55


Q. I recently took a VERA retirement from federal service at age 55. My understanding is that the 10 percent withdrawal penalty does not apply to subsequent TSP withdrawals. Originally, I chose a monthly fixed dollar amount of a full withdrawal that could be changed during open season, but with the TSP Modernization Act I can start and stop installments, as well as change withholding. Originally, I had planned to withdraw the full amount of my TSP over 5 years, but last month I chose a lesser amount to take out and TSP sent me a letter that my TSP account would now last more than 10 years if all my future payments were the same. My question is: Does any of this affect the 10 percent early tax penalty or am I still good because I retired at age 55?

A. None of this will affect your exemption from the early withdrawal penalty. The age 55 exemption is unconditional.


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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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