Q: I retired with a Federal Employees Retirement System Thrift Savings Plan account and am 60 years old. I would like to make a partial withdrawal and understand it will be taxed 20 percent by the federal government. At the end of the year, they will send a 1099 form to be used for federal income filing. I still have two children in college and am currently paying for that. Will I be able to recoup some of the income tax paid from my withdrawal if all works out on my federal tax form (education credits)? Or is this tax not considered “federal income tax paid” like it would be if I was still working?
A: The TSP witholding is a deposit made against your future tax liability. If you overpay, you will receive a refund after your tax return for the year has been filed.