Q. I am currently employed with Bureau of Prisons with the law enforcement offer FERS retirement potential. I am 40 years old, with nearly 4 years in with the Bureau. I am in the process of buying back 3.4 years military service. I also have a 100 percent permanent VA disability rating. Being that I began federal service late, I am not sure how my body will hold up to being a corrections officer for 20 years. But looking ahead, if I cannot continue my job due to aggravated or increased disabilities and I end up medically retiring early, meaning before…
Browsing: early withdrawal penalty
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…
Q. What agency would I need to seek remedy on requesting a TSP withdrawal with paying no federal tax and the IRS withdrawal penalty? I am a 58-year-old FERS employee with four years to go before I can retire. I can get a TSP withdrawal at age 59½ years old without paying the IRS penalty, but I need the money now due to immediate financial needs, including not paying the federal/state taxes and penalty. A. Since you are currently eligible to contribute to the TSP and are under age 59½, there are only two ways to remove money from your…
Q. My late husband was a FERS retiree when he passed in 2017. I am also a federal employee, but am under CSRS. I’m planning to retire soon, and am wondering if I have our TSP funds in the correct L Funds. I was told it should correspond to your retirement year, but just read that it should be based on my life expectancy. Which is accurate? Also, is it correct that if I withdraw from my husband’s TSP it would not be subject to the 10 percent penalty? A. There is no “accurate” or correct way to choose an…
Q. I am retiring from federal service at my MRA of 56 with 30 years of service. I plan to continue to work as a support service contractor to my federal agency. Can I withdraw money from my Thrift Savings Plan savings without penalty while I am working as a support service contractor? I know I will have to pay income tax on my withdrawals, but wanted assurance that my withdrawals will not be subject to a penalty since I meet MRA and years of service requirements. A. Under the circumstances you describe, your TSP distributions will be exempt from the…
Q. I received a Voluntary Early Retirement Authority in 2012 at the age of 53. I chose to receive a monthly installment payout from my TSP for at least 10 years, believing I would not be taxed. I received a letter of deficiency from the IRS stating that I owe a penalty for not paying taxes on my TSP installments. Is this correct? A. That’s a question for tax accountant, but if you did not follow the rules governing a Series of Substantially Equal Periodic Payments, you might owe the early withdrawal penalty. The rules are complex and you should engage a…
Q. I retired from the U.S. Postal Service at the end of 2018 with 31 ½ years of service. I met my minimum retirement age at 56, so I believe I wouldn’t be taxed a 10 percent penalty if I withdrew from my TSP before age 59 ½. I would like to withdrawal a partial lump from my TSP. Would I be taxed for that withdrawal? A. If you receive a TSP distribution before you reach age 59 ½, in addition to the regular income tax, you may have to pay an early withdrawal penalty tax equal to 10 percent of…
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…
Q. I was offered VERA at office. I would like to accept, but have a TSP loan balance for a home loan that won’t get paid by the 90-day deadline. My retirement is set for July 2020. When I separate and still have outstanding balance, how will I get taxed and at what percentage rate? I was not due to retire until May 2027. Also, will it affect annuity payments, and how long do I have to pay the loan back? A. Any unpaid balance will be declared a taxable distribution and added to your tax return for that year as ordinary income. The tax…
Q. I retired from my dual-status job on Dec. 31, 2018, at the age of 53 in Mississippi, which is below my minimum retirement age. Am I able to collect from my TSP plan without paying a penalty since I am under my MRA? What are the laws that govern this for my CPA to use at tax time? A. If you receive a TSP distribution before you reach age 59 ½, in addition to the regular income tax, you may have to pay an early withdrawal penalty tax equal to 10 percent of any taxable portion of the distribution not…