Q. I am 57 years old, currently working at DHS/CBP and have 12 years and 5 months of service. I have degenerative disc disease, which in turn limits my abilities to do my daily activates at work as well as at home. I have had several treatments over the past 15 years and there is not much that can be done to relieve my pain without taking anti-inflammatory medication along with narcotics for pain relief. The pain meds limit my thinking abilities and make me drowsy and I can’t drive my one-hour commute to work every day. I can’t sit or stand for long periods of time, lifting is a thing of the past for me.
I would like to know my options for disability retirement and collecting a monthly income from my TSP account without any early withdrawal penalties and taxes. Is it possible to claim a disability hardship with TSP? Also, can I continue to work while I file for a disability retirement to maintain monthly income? I carry the health insurance for my husband & myself.
A. With regard to the TSP, your distributions will be considered ordinary income for tax purposes, and if you separate from service during or after the year in which you reach age 55, your subsequent TSP withdrawals will not be subject to the early withdrawal penalty. There is no such thing as “a disability hardship” with the TSP.