Q: I recently retired at age 50 under the FERS/Air Traffic Controller special provisions. I would like to use my TSP funds with the full withdrawal series of monthly payments option calculated by the TSP
based on the IRS Life Expectancy Table. Does this qualify with the IRS as a “substantially equal payment over your life expectancy”? Will these payments be exempt from the 10 percent IRS early withdrawal penalty?
A: Yes, this distribution option will qualify for the SEPP exemption to the early withdrawal penalty. You will need to continue these payments for five years, or until you reach age 591/2, whichever is LONGER to avoid the penalty.