Browsing: early withdrawal penalty

Q. I was born Jan. 21, 1980, so I’m currently 37. I turn 57 (my minimum retirement age) in 2037. I have 10 years of AD service, from June 1998-May 2008. I joined the civil service a week after leaving the military and now have roughly nine years of service. I have bought back all 10 years of military service but am still in the Air Guard. The Guard position is not linked to my FERS position. If I retire at age 57, do I suffer any penalties or taxes for pulling before age 59½? Or do I need to follow…

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?

Q. I plan on retiring next August at 57 years old. I would like to buy an immediate annuity but do not want to buy the MetLife FERS annuity. Their interest rates for the annuity are extremely low compared to other annuities. When I retire at 57 years old, can I buy another annuity and avoid paying 20 percent upfront tax when buying that annuity? Also, can I get my payments without the 10 percent penalty for not being 59½?

Q. I will be 50 years old in September 2017 and will have more than 20 years of federal law enforcement service. I plan to retire Dec. 31, 2017. I know I must leave my retirement funds in the TSP to qualify for the Public Safety Act’s penalty-free withdrawal options. However, I plan to withdraw about $150,000 from the TSP and start a lifetime annuity with the remaining $400,000. Will the $150,000 and/or the $400,000 withdrawals will be penalized? (I know I’ll have to pay tax, which is fine.) Can I take the $150,000 withdrawal and then a few years later initiate…

Q. My husband plans to withdraw all his money from the TSP with an in-service withdrawal when he turns 59½ in November. A portion of his account is a Roth that will not meet the five-year rule until January. For tax purposes, it is best that the withdrawal be made in November rather than January. He does not have an outside Roth set up, but I (his non-working spouse) have had an outside Roth account for more than five years. Is it possible to deposit my husband’s TSP Roth portion into my Roth account in November and then withdraw it in January…

Q. If I retire at age 56 in January 2017 with 20 years’ federal law enforcement service with the Federal Bureau of Prisons, will there be a cap on the amount of money I can earn in 2017 and each year after while drawing the FERS supplement along with my pension? Also, if I draw out a one-time lump sum from my TSP to build a small cabin, is that considered earned income and will it cause me to lose my FERS supplement? What will be the tax rate for the TSP lump sum withdrawal at age 56? Will I…

Q. I took a voluntary early out from the U.S. Postal Service in October 2012. I had 24 years with USPS and six years with the Navy. In May 2015, I was diagnosed with a low-grade brain tumor, which makes me unemployable because of seizures. Will this condition allow me to get early, monthly withdrawals from my TSP? I’m 57 years old. If there are any other government benefits for which I may qualify, please share them.

Q. I plan on retiring Dec. 31, 2017. I will be 56 years old — my minimum retirement age — with 33½ years of service. I’m employed in a covered law enforcement position (DHS-CBP). My current TSP balance is approximately $465,000, and I only contribute to the basic TSP, not the TSP Roth. I would like to take a partial ($100,000) at retirement to pay off my house and also take a monthly set amount. Can I do both? Would I be subject to any early withdrawal penalty (under age 59½) on the partial $100,000 that I would use to pay off…

Q. Recently, legislation known as the Defending Public Safety Employees’ Retirement Act was passed, which would amend the tax law to allow special category employees to withdraw money from TSP accounts prior to age 59½ without incurring the 10 percent IRS tax penalty. I am a military technician with 33 years of service. I know military technicians are special category employees. Would I qualify for this provision?

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