Skirting the penalty


Q. We are getting ready to be offered an early retirement under the Voluntary Early Retirement Authority. I’m a Civil Service Retirement System employee, and I’m thinking about taking the offer. I would like to withdraw my Thrift Savings Plan, but I won’t be 55 until Feb. 22, 2012. Is there any way of getting around paying the 10 percent Internal Revenue Service penalty for early withdrawal under the age of 55?

A. If you actually separate from service on or after Jan. 1, 2012, your TSP withdrawals will not be subject to the early withdrawal penalty. If you separate earlier, you may avoid the penalty by taking a series of Substantially Equal Periodic Payments under IRS code section 72t, or by using the withdrawal to purchase, through rollover, of a life annuity.


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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

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