Browsing: Disability

Q. What is the definition for the Thrift Savings Plan early distribution exclusion “made as a result of total and permanent disability”? Does this mean that a retired military member with a Veterans Affairs Department-certified disability who is under age 55 is excluded from the 10 percent early withdrawal penalty? Specifically, I would like to withdraw my TSP in full upon military retirement at age 42 and will most likely have a portion of VA-certified disability based on injuries sustained on active duty. What justification is needed to report to the Internal Revenue Service when you file your taxes? A. I…

Q. I am 55 years old and in the process of obtaining Postal Service disability. I want to know the tax ramifications if I withdraw my Thrift Savings Plan at 55 after separating from service. I will have 24+ years in. I have $200,000 and want to make monthly payments, not based on life expectancy. I want to withdraw $1,000 a month at 55 for 25 years or so until it is depleted. Am I subject to any additional penalty taxes? I called TSP and the Internal Revenue Service and was told that because I am spreading the monthly payments over 10 years, they would…

Q. I turned 62 in December. I am 100 percent disabled from combat wounds.  I worked federally for a while and saved $102,000 in a G Fund under FERS. I’m about to start losing my home as my wife will have to retire this year. Without her income, we won’t be able to afford the mortgage (but no credit card or other debt on the house.) What percentage at age 62 does a 100 percent disabled vet have to pay when withdrawing savings in full?  I think it’s stating 20 percent, but that doesn’t seem reasonable. Am I reading it wrong? I want…

Q. I have 33 years in and am under CSRS. I will be 60 years old in May. I served less than two years in the Army in my 20s. I am a WG-8 making almost $25 an hour. I receive correspondence statements from Social Security that if I retire at age 62, I would be eligible for approximately $300 based on a second job 12 years ago and jobs before joining the government in the 1980s. 1. Should I buy back the time I have in the Army? 2. Will the buyback help increase my Social Security? Or will…

Q. I retired on disability in March 2007. I turned 58 on May 15. What tax rate will I have to pay at 59½ years of age, and what penalty would I pay for withdrawing before then? A. The rules can be complex, depending upon your circumstances. I suggest that you read the notice at https://www.tsp.gov/PDF/formspubs/tsp-536.pdf and then I’ll answer any remaining questions you may have.

Q. I am a 55-year-old postal worker of 27 years who has a work-related medical problem. Last year, I was let go on “no work available status” and have been on workers’ compensation since. I have applied for postal disability and am waiting to see what happens with that. So far, I’ve received no letter of separation nor postal job offer. Will I be able to access my Thrift Savings Plan without penalty if I become separated from the Postal Service and am granted disability retirement? A. The answer depends upon your specific circumstances. If you separate from service during the…

Q. I am four years away from retirement at the Postal Service. However I have Parkinson’s disease, and I don’t know if I can hang in there. Any advice on whom I can contact regarding my options and what is best? Disability or trying to hang in there until 2016? A. Continuing to work will produce a better financial result. The real question is whether the financial improvement is worth the suffering, and only you can make that decision. I can show you what the additional work will mean to you in terms of your lifetime standard of living. Visit…

Q.  I have just been granted a medical disability from civil service, and I would like to withdraw some money from my TSP account. I would like to know if the rules apply for TSP like they do for an IRA account in waiving the 10 percent penalty if you have a permanent disability. A. Yes, the “totally and permanently disabled” exemption from the early withdrawal penalty does apply to the TSP.