Browsing: law enforcement officer

Q. I will be retiring at age 52 with 27 years as a law enforcement officer. If I do a partial withdrawal of the Thrift Savings Plan for down payment on a house, I know I pay taxes.  I also would pay a penalty as I would be taking the partial withdrawal before age 55. Is the penalty 10 percent or 20 percent? Is the penalty directed at the entire amount withdrawn or toward the amount after taxes? A. The penalty is 10% of the gross amount.

Q. I will be age 54 at retirement. As a retired federal law enforcement officer, am I exempt from the 10 percent penalty for early withdrawal from my Thrift Savings Plan at retirement? I keep reading public safety personnel are exempt, but it reads as applying to state or municipality, but my status is federal. A. No, your LEO status does not exempt you from the early withdrawal penalty.

Q. If I agree to make Substantially Equal Periodic Payments available under Internal Revenue Service code section 72(t) from my TSP, may I do so before I retire and avoid the 10 percent penalty? If it matters, I am a federal law enforcement officer who will have 25 years of service before age 50. A. No, since you’re not allowed to initiate monthly payments before you retire. The 72(t)-compliant distributions will avoid the early withdrawal penalty whenever they are initiated, however.

Q. In IRS Publication 575 on page 33, they list an exception from the 10 percent penalty on withdrawing from the Thrift Savings Plan fund for qualified public safety employees. As a federal agent, if I retire in the year in which I turn 50, am I exempt from the 10 percent early withdrawal penalty based on the qualified public safety employee clause? IRS Publication 721, pages 17-18 lists a law enforcement officer as a qualified public safety employee. If this is the case, why do they not mention this when doing pre-retirement seminars? A. The exception only applies to defined benefit…

Q. As a federal law enforcement officer with 25 years of service, can I retire at the age of 47 and withdraw monthly payments from my Thrift Savings Plan balance based on life expectancy without paying a 10 percent penalty? If so, can I change this at 60 years of age to a specific dollar amount monthly payment without a penalty? A. Yes, as long as they continue, without interruption or error, until you reach age 59½. After that, you may change the payments without penalty. The rules for avoiding the penalty are complex and strict, so you should consult…

Q. During a retirement seminar, I was told that federal employees who retire during the year they turn 55 but before age 59½ have a one-time opportunity to withdraw funds from the Thrift Savings Plan without paying the 10 percent tax penalty. Is this correct? If so, how should this withdrawal be reported to the Internal Revenue Service so that the penalty is not assessed? I am a retired federal law enforcement officer, which may or may not be relevant. A. This is bunk. If you retire during or after the calendar year in which you reach age 55, any and…

Q. In March 2013, at age 56, I am eligible to retire under FERS as a federal law enforcement officer with 23 plus years of service (20 as an LEO). I turn 57 on Oct. 11, so I will be forced to retire Oct. 31. Assuming I do not need the money immediately, what are my options with regard to my Thrift Savings Plan? I do not want to pay any penalty and want to pay as little in taxes as possible. It was suggested that I roll it over to an IRA so that in event that I need…

Q. As a federal law enforcement officer facing mandatory retirement in 2013, I have been looking closely at my Thrift Savings Plan withdrawal options. When I retire and I leave my complete TSP balance in the G Fund, can I request withdrawals whenever I want and for whatever amount I want? I see that there are options for setting up a recurring amount each month or year, but can that be changed to month to month or whenever it is needed? For example, because receiving my full retirement pension amount in a timely manner will most assuredly not happen, would…

Q. I recently retired as a federal law enforcement officer at age 50 after 25 years of service. I am able to presently withdraw a monthly set amount from my Thrift Savings Plan without the 10 percent penalty, correct?  May I also reduce the 20 percent tax withholding TSP imposes on me? A. Based on the information you’ve provided, you will be subject to the early withdrawal penalty unless you take your payments as a series of Substantially Equal Periodic Payments under Internal Revenue Service Rule 72t. There is no exception to the early withdrawal penalty for LEOs. The usual…

Q. I have been reading your column and am confused. There have been references to receiving a full lump sum payment of Thrift Savings Plan money upon retirement with 30 years of federal service without the 10 percent penalty. Is this true if I am 51 years old, retirement-eligible with 27 years as a law enforcement officer plus five years regular retirement service? A. No. The relevant exemption to the early withdrawal penalty has nothing to do with years of service but with age. You must retire during the calendar year in which you reach age 55 for it to apply.

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