Browsing: withdrawal penalty

TSP penalty due to wrongful termination

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Q. I was wrongfully terminated from federal service in 2010. The case was settled out of court, after seven months. During that time I was no longer in Civil Service and could not legally contribute to my TSP and, seeing I had no income, I removed my TSP so that I could continue to pay bills and maintain my mortgage. I was 50 years old at the item of the wrongful termination, I have paid the required taxes, but now I am subject to the penalty due to no fault of my own. As part of the agreement with the…

Separation from Postal Service and TSP access

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Q. I am a 48 year old male. I am a letter carrier for USPS. Due to unfortunate circumstances, I will be applying for Social Security disability and disability retirement from USPS. Here’s the thing.  I have had two previous surgeries on my spine, both covered by worker’s compensation. Right now I am using all my sick leave until worker’s compensation receives all of the information it needs. Is there a separate retirement through OWCP or do I need to file for disability through the Post Office. I am thinking of separating from the Postal Service because of my financial…

TSP lump sum, with loan balance

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Q. Thank you very much for allowing us the opportunity to “ask the experts” through your forum. It can be difficult to get a correct answer at times from the Web. I am an air traffic controller with 30 years government service, and am eligible to retire now at 50 years of age. I currently have a TSP loan with a $2,900 balance outstanding. If I retired now, would I be able to withdraw my TSP account as a lump-sum payment with this outstanding loan balance? Or would I first be required to pay off the $2,900 loan before TSP would…

TSP withdrawals

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Q. What are the answers to the below questions if under age 55? For instance, taking a early retirement option at age 53 — how would the TSP 10 percent penalty apply using the original scenarios in the question?? Original question: Q. I have read many of the articles and TSP literature and I am still a bit confused. As a federal law enforcement officer over age 55, I plan to retire later this year. I have read that if I want to take withdrawals from my TSP account prior to age 59½, I can do so without having to…

TSP and retirement

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Q. I have read many of the articles and TSP literature and I am still a bit confused. As a federal law enforcement officer over age 55, I plan to retire later this year. I have read that if I want to take withdrawals from my TSP account prior to age 59 ½, I can do so without having to pay the 10 percent IRS penalty for early withdrawal, so long as I do it in an annuity (not interested) or, based on life expectancy (not interested as it provides more funds than I want at the beginning of my…

Potential move to L funds

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Q. I am retired (2008) and still maintaining my TSP fund.  I don’t plan to dip into it for at least 5+ years.  I am now 67 years of age (68 in July), and would like your opinion on the feasibility of moving my entire TSP holdings into the L 2020 Fund.  Also, should I take that step, what are the penalties for withdrawal before 2020? A. It is possible for you to move your money into the L 2020 Fund and there are no penalties for withdrawals from the fund.

TSP penalties

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Q: If I retire from active duty military service at the age of 42 after 20 years of service, can I withdraw from my TSP without tax penalties? Can I withdraw from my TSP after the age of 59½ with no tax penalties? A: Unless you use the money to buy a life annuity, take the money as a series of Substantially Equal Periodic Payments under IRS rules, or meet one of the other specific exceptions, you’ll have to pay the penalty for withdrawals taken before your reach age 59½.

TSP for CSRS Special

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Q: I am a federal firefighter under CSRS Special Retirement due to retire in November of 2011 at age 50. At what age will I be able to collect on my TSP retirement? A: While you can access your TSP account any time after you retire, you’ll be subject to the early withdrawal penalty rules until you reach age 59 1/2, unless you qualify for one of the exceptions. See page 4 of the tax notice at https://www.tsp.gov/PDF/formspubs/octax92-32.pdf for details.

Penalty for withdrawal

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Q: Based on your answers to previous questions, if I retire at age 58 (my MRA is 56) with 15 years service, I can start receiving payment immediately. Why is it my Human Resources folks and the printed literature I read says I have to wait until I’m 59.5? A: The exceptions to the early withdrawal penalty are listed in the section titled “Additional 10% penalty tax if you are under age 59 /12” on page 4 of the TSP tax notice at https://www.tsp.gov/PDF/formspubs/octax92-32.pdf.

TSP

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Q. I am a CSRS 50-year-old employee who would like to withdraw $80,000 from my TSP to cover unsecured debt. Is this smart? My debt is strangling me. What is the tax hit and how can I avoid it? A. You don’t have the option to make a withdrawal unless you can demonstrate financial hardship under the TSP’s definition. If you take a Financial Hardship withdrawal, you will owe tax on the amount you take and you will be subject to the 10 percent early withdrawal penalty. You can, and should consider taking a loan, instead. Taking a loan will…