Q: I will retire at 48 with 25 years in law enforcement. I will also want to start receiving monthly checks from my TSP. I know I will have to pay the 10-percent penalty because of my age. Is this a one-time penalty or do I have to pay this every year until I reach age 56? A: You’ll be subject to the early withdrawal penalty until you reach age 59 1/2 unless you qualify for one of the exceptions listed on Page 4 of the notice at https://www.tsp.gov/PDF/formspubs/octax92-32.pdf.
Browsing: early withdrawal penalty
Q. I am an FAA air traffic controller with 27 years of service. I was wondering about the age 55 rule for a one-time withdrawal of TSP funds without penalty. If I retire at age 53, can I take out a lump sum when I turn 55, or do I have to work and retire the year I turn 55 to do this? If so, how much money can be taken out without penalty. I also was wondering if I worked till mandatory retirement age, and get forced out, can I still get the one time lump-sum withdrawal without penalty…
Q: I worked 20 years for the postal service, from 1984 to 2004. I was 49 when I resigned. My Thrift Savings Plan money has remained untouched. I am 56 now, my MRA. Will I be subject to the 10 percent penalty tax, if I ask for monthly payments for a period of 10 years to start now? If yes, how can I receive my TSP money now without the penalty tax? A: You’ll only avoid the penalty if your payments meet the IRS definition of Substantially Equal Periodic Payments. The rules for these payments can be complex and you…
Q. My activity is offering voluntary separation incentive payments/voluntary early retirement. I am 56 years old, have 22 years in service under FERS. Do I get the 5 percent penalty if I accept the offer? Am I allowed to withdraw monthly on my TSP? A. Since you will retire during or after the calendar year in which you reached age 55, you will have access to your TSP account without the early withdrawal penalty.
Q. I am taking VIRA/VSIP and am age 53. I have 26 years time in service and my minimum retirement age with 30 years of service is in 2015 at age 57. When can I access my TSP funds without being subject to the 10 percent withdrawal penalty? 1. Most literature indicates that if you retire early in the year 55 or later, you can withdraw immediately without penalty. 2. The TSP board (I called twice already) says only 59½. 3. The FERS handbook states you can withdraw without penalty at MRA with 30 years (my case 57). I would…
Q. I retired December 2010, at age 53. I would like to withdraw my 401(k) but understand the penalties involved since I separated before age 55. Under “exceptions” in the tax code there is a “qualified public safety employee” exception to the rule. Do 6C government employees fall under this? A. To the best of my knowledge, the qualified public safety employee exception only applies to defined benefit pension plans, not defined contribution plans like the TSP or a 401(k). A bill to change this – HR 6157 – was introduced in 2008, but never made it out of committee.
Q. I would like to know the best way of accessing all the money in my TSP account while avoiding IRS early distribution penalties. Here is my situation: * I am CSRS Offset and retiring on Jan. 31 with 30 years of service. * I will turn 55 on Sept. 1, 2012. * I have $92,000 with the TSP. I need to withdraw virtually all of my TSP account to pay off all my high-interest loans. How soon can I withdraw the TSP account funds without the IRS early distribution penalty? A. Since you are retiring during the calendar year…
Q: I am a CSRS employee with 34 years of service. Should I take a VERA at the age of 53? What penalties will be imposed on my TSP? I would like to draw it out in one lump sum and invest it in an annuity recommended by my financial adviser. A: You will be subject to the early withdrawal penalty unless you roll over the withdrawal into an IRA. You may want to think carefully before following your “adviser’s” recommendation. I suspect that he/she is actually a salesperson who is compromising your interests in favor of their own! I…
Q: I am a retired postal clerk with FERS. I have money in my TSP. I am 57 and I called someone at TSP to ask if I can take a partial amount of my money now without getting penalized. They said I can do it only once. Is this true? A: You are only allowed one partial lump-sum withdrawal from your TSP account. That’s a TSP rule. Whether your withdrawal is subject to the early withdrawal penalty is a matter of law. Once you have taken a partial lump-sum withdrawal from your TSP account, your only withdrawal option is…
Q: I am 56 and will retire in December under FERS. I read your article in Federal Times’ Sept. 12 issue, “How to avoid TSP early withdrawal penalty.” What other options are available besides transferring my TSP to an annuity with an insurance company? A: The article clearly explained the answer to your question – since you’re retiring during or after the year in which you reach age 55, the early withdrawal penalty will not apply to your TSP withdrawals.