Penalties for withdrawals


Q: If I retire at the age of 50 (21.25 years of service), I have a question concerning TSP. If I choose the life expectancy withdrawal at that time, from what I gather it is penalty free. In the year I turn 55, can I switch to the monthly payment withdrawal, and would that too be penalty-free?

A: You’re talking about avoiding the early withdrawal penalty by using a series of Substantially Equal Periodic Payments (SEPP), which must continue for five years, or until you reach age 59 1/2, whichever is longer. You will find a SEPP calculator and additional information at (


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Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to and view his blog at


  1. For FERS retirees if you retire at age 50 you will have to wait till 59 1/2 to withdrawal a set monthly payment with no penalties. I f you retire in the year you turn 55 you will not have to pay the penalty.

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