Q. I read a question regarding TSP. You stated that if the TSP is used for purchasing a home, the money would be taxed. In other words, they are telling you how to spend your hard-earned money. I would like to think that I could spend my money any way I desired. Please tell me if there are restrictions on how to spend my money? A. All money that is withdrawn from the the TSP is taxed as ordinary income.
Browsing: TSP withdrawal
Q. If I take voluntary early retirement and I am 55 can I start my TSP monthly payments at that time without a 20 percent penalty. Or do I have to wait until I am 59 1/2 to start receiving from my savings in the TSP? A. You may withdraw money without penalty.
Q. Is there a difference for reported income from a Thrift Savings Plan withdrawal versus a TSP annuity payment? In your Q&A, the TSP withdrawal is said to be reported as income while the TSP annuity is not reported as income. Why? A. Distributions from your TSP account and payments from a TSP annuity are both considered taxable income.
Q. I retired under the provisions of early retirement for law enforcement officers on Jan. 1, 2011, under CSRS after 35 years of federal service. At the time I retired I was 54 years old, but will be 55 years of age in September. From what I have read in the TSP booklet regarding the 10 percent early withdrawal penalty and cited exceptions to this penalty, I would not be subject to the penalty in that I separated from service during the year I reached age 55. Is my interpretation correct, in that I did not have to actually be…
Q. I am nearing retirement in law enforcement and will only be 47 years old. I am trying to determine the best way to withdraw a small portion of my TSP account to avoid the early withdrawal penalty. I am wondering about purchasing an annuity at less than 100 percent of my $400,000 TSP balance. These payments would be monthly for life I understand, but what happens to the remaining money I have in the TSP? May I invest it as I choose in the various funds and what are my withdrawal options for that money as I doubt I…
Q: I am 57 years old. I retired from civil service on Dec. 31, 2010. I have not taken anything out of my TSP account. I would like to withdraw a partial payment from my TSP account and then set up monthly payments. Will I have to pay the 10 percent penalty, on the partial payment, since I am now 57 years old and have been retired for almost six months? A: Since you retired during or after the year in which you reached age 55, you will not be subject to the 10 percent early withdrawal penalty.
Q: I have a question regarding a withdrawal recently made from my TSP account. I wanted to make an investment with this account and withdraw the full amount by not having the taxes withheld on the account. When I called the TSP phone number, the representative said that I could withdraw the funds and pay the taxes later on my next tax return by using a WP4 form. Being assured that it could be done, I went ahead and sent in the form to withdraw from my TSP account with the WP4 form. Without informing me first, the money was…
Q: I am retired and have not withdrawn money from my TSP as of yet. It is my understanding that if I should die tomorrow, my spouse would inherit the full amount of my TSP. But when I looked into beginning monthly withdrawals from my TSP, it seemed to say that I had to buy an annuity with my spouse being the beneficiary of 50 percent in the event of my death. Why would my spouse not inherit the full amount? A: You don’t have to buy an annuity to initiate monthly payments from your account. Use Form TSP-70 to request automatic…
Q: I’m retired, 57, and would like to withdraw a portion of my TSP to put toward the purchase of a new house. Can this be done without an early withdrawal penalty? A: Only if you separated from federal service during or after the year in which you reached age 55.
Q: Does this mean I can’t take a loan or retirement withdrawal until the government stops using TSP for government spending? A: No.