Q. It is my understanding that if you retired in the year you turned 55, you never pay 10 percent penalty on Thrift Savings Plan withdrawal, correct? A. Correct.
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Q. I’ll be retiring early next year (2012) and would like to learn if (or how) a Thrift Savings Plan withdrawal taken at retirement that is used to purchase or build a primary residence would be subject to federal tax. A. It will be taxed as ordinary income.
Q. Knowing that everything is a personal situation decision. I’ve gotten advice to take a TSP monthly payout versus the annuity or lump sum. What are the advantages of this action. A. The advantage versus the lump-sum payout is that the monthly withdrawals will allow you to continue to invest the balance in the TSP until it is withdrawn. The advantage versus the annuity is that you retain control of the assets.
Q. I am under the Federal Employees Retirement System. I am 49 with 21 years of service. I am being told there will be a Voluntary Early Retirement Authority/Voluntary Separation Incentive Pay offered this fall and next spring. I will turn 50 during the VERA/VSIP timeline. If I take the VERA, will my government annuity be reduced by 5 percent per year? Will I be able to receive both my government annuity and my Thrift Savings Plan annuity as soon as I leave service? Is there a penalty in taking the TSP annuity now? Will I qualify to get the Social…
Q. I would like to withdraw monthly payments from my Thrift Savings Plan that are less than the monthly interest might be. Is this possible? A. Yes, but you’ll have to pick the dollar amount.
Q. I am a 66-year-old female who retired in January 2007, with more than 30 years Civil Service Retirement System service. I am thinking of withdrawing my Thrift Savings Plan savings. I understand that I will not be penalized the 10 percent, and I would have to pay the mandatory 20 percent if I decide to withdraw. Does the 20 percent also apply at age 70½? Does this also apply to partial withdrawals, and do you have to pay back if you do a partial? Is the amount taxed by the Internal Revenue Service on your entire TSP earnings? What percentage…
Q. I would like to know if there are any options to remove any portion of Thrift Savings Plan balance (e.g., my own contributions), prior to separation, retirement or a disability. I do not want to leave government service, nor am I eligible to retire. But I would like to control my own investment choices and am willing to consider paying an early penalty and taxes to withdraw the funds. A. If you are at least age 59½, you may take one age-based, in-service withdrawal. If not, you may not withdraw or roll over your TSP assets unless you can prove…
Q. I am going to retire under the Civil Service Retirement System. I will be 58 when I retire. Will I be able to withdraw my Thrift Savings Plan upon retirement without any penalty? I will be 59 one month after I retire. A. Yes.
Q. If I have more than 240 hours of annual leave when I retire, will I be allowed to cash that amount in also, or will I have to take the leave before retirement? If I retire at the end of a calendar year, will I be able to cash in my annual so that it is taxed the following calendar year? Does this also apply to TSP? A. You may delay your TSP withdrawals for as long as you like, subject to the Required Minimum Distribution rules that apply beginning at age 70½.
Q. I am retiring by the end of this year at the age of 56. I read in the Thrift Savings Plan where you can take a one-time withdrawal payment. Do you have to pay a penalty? Do you have to take it at the end of the year? For example, if I retire in December 2011, will I have to wait until December 2012 to take the one-time withdrawal? Can I take a withdrawal as early January or February 2012? A. Once you’ve retired, the partial withdrawal is available immediately.