Q: I am a federal firefighter under the Civil Service Retirement System who will be eligible to retire next year with 28 years of service at age 50. When can I start withdrawing funds from my Thrift Savings Plan without getting penalized? A: If you receive a TSP distribution before you reach age 59 1/2, in addition to the regular income tax, you may have to pay an early withdrawal penalty tax equal to 10 percent of any portion of the distribution not transferred or rolled over. The additional 10 percent tax generally does not apply to payments that are:…
Browsing: TSP penalties
Q: I’m turning 70 in February, I contribute the maximum to my Thrift Savings Plan, and I plan to work for a few more years. Am I allowed to continue contributing to my TSP in 2011, or will I be penalized with my taxes because I will be turning 70 1/2 in August? Also, will I be matched for my contributions? A: Your eligibility to continue participating in the TSP, including any matching, will continue until you separate from federal service.
Q: I am retired military, and I want to withdraw the full amount of my Thrift Savings Plan account. Will I pay the tax and penalty immediately, or will I pay when I file my 2011 taxes? I have about $14,000 in my TSP. In other words, will I recieve the full amount or will it be taxed first? A: You won’t actually be required to pay the tax and penalty until you file your return, but the TSP will withhold 20 percent from your payment as a deposit against future liability. You may not reduce this withholding, but you…