Q. I am 50 and I retired as a firefighter (Special Category) on Dec. 31, 2013, with 25 years and 10 months of service. I want to withdraw my TSP but I’m being told by TSP that they withhold 20 percent for taxes and my accountant is telling me that I will have to pay 10 percent for a penalty because I retired early. I looked into the IRS publications 575 and 721 and they state I don’t get charged a penalty.
Browsing: early retirement
Q. So I’m retiring early, age 55, on the early out offer effective on July 31, 2014. I will begin monthly withdrawals from the Thrift plan at the rate of 20K per year as soon as I can, hopefully beginning in September 2014. I will receive my pension payment of 25K, and beginning in November 2014, I qualify to begin receiving the supplemental payment of slightly over 10K because I turn 56 on October 30, 2014. I like the idea of eventually converting to an immediate fixed annuity at some point after I’ve managed my own distributions for a lengthy…
Q. I will be 52 years old March 9. I am covered under FERS, and I have 31 years of federal service. If my base offers an early-out this year, I plan to take it. I have a substantial balance in the Thrift Savings Plan and would like to withdraw it in its entirety when I take the early-out so I can invest it in my daughter’s business. 1. Will I be penalized for withdrawing my TSP funds early? If so, how much? I know I will be taxed, and I am OK with that. My husband plans to keep…
Q. I retired early from the post office last year. At the time, I had a two loans out on my Thrift Savings Plan account. Now the time has come to pay the piper and the tax bill is enormous. I just turned 56 in January. Is there any way to lessen the blow or offset any of the taxes and penalties from the unpaid loans I took out before retirement? Or at least something I can do, other than pay the full amount of early withdrawal and regular taxes? A. Assuming that it’s been more than 60 days since…
Q. I have 15 years of federal service and would like to do an early retirement with MRA+10. Would I have to take a reduction in my Thrift Savings Plan, or just my federal retirement only? A. Mike: I’m not sure what you mean by a reduction in your TSP, but there is no reduction to your TSP account balance due to retirement. Reg: If you retired under the MRA+10 provision, the only reduction would be in your annuity.
Q. I will have 30 years of service and be 54 years old when I take early retirement in January. Since I will turn 55 in August 2014, will I be able to withdraw without penalty from my TSP even though my minimum retirement age is 56? A. As long as you separate from covered service during or after the calendar year in which you reach age 55, you will avoid the early withdrawal penalty on withdrawals taken after you separate. Your MRA has nothing to do with it.
Q. If I retire early at 50 years of age with 30 years of service under FERS, I understand I’d have to wait until my minimum retirement age to receive the special retirement supplement. What reductions would I have in my retirement annuity? Would I be able to receive monthly Thrift Savings Plan annuity at age 50? A. Mike: You may use your TSP money to buy an immediate annuity and receive monthly income payments at any age, once you are separated from service. Reg: If your agency offers you a Voluntary Early Retirement Authority, there wouldn’t be any age-based…
Q. I am a FERS employee with 29½ years of service. I am 54 years old. If they offer an early-out this year, could I take it without being penalized for the years before age 56? Would I be able to collect the special retirement supplement? Also, will I have a problem if I remove the money I have in my Thrift Savings Plan account? A. Mike: If you separate from service before the calendar year in which you’ll reach age 55, your TSP withdrawals may be subject to the IRS early withdrawal penalty, but otherwise, you’ll have access to…
Q. I am a 53-year-old CSRS employee with 31 years of service and I am contemplating taking advantage of any early-out retirement option if offered next year. I have heard rumors that the Internal Revenue Service has a rule in place that states that if I retire before age 59½, it will assess a tax penalty of 10 percent on my annuity amount for having retired early? I realize there is a penalty on the Thrift Savings Plan part, but I have never heard of tax penalty on federal pension due to early retirement. A. Not true.
Q. I have 27½ years in the Postal Service and I am 52½ years of age. If an early-out comes in the next few months, will I get a penalty for leaving? Do I get my special retirement supplement, or do I have to wait for that? Also, do I get to take my Thrift Savings Plan now, or do I wait for that? A. Mike: The early-out has no effect on the Internal Revenue Service early withdrawal penalty. You will be subject to the penalty until you reach age 59½ unless you qualify for one of the exceptions listed…