TSP and early withdrawal penalty


Q. I retired under the provisions provided for federal law enforcement officers at age 52 (I’m now 58) under CSRS and am confused concerning under what circumstances and when I can withdrawal my entire Thrift Savings Plan balance without paying a 10 percent tax penalty. It’s my understanding, after reviewing the information in the TSP book, that after age 55, you can begin making withdrawals from your TSP either as a monthly paid annuity based on life expectancy or monthly installment payments but that the 10 percent penalty will apply if I withdraw the balance lump sum if done before I am 59½. On the other hand, I have previously been told that under the law enforcement retirement provisions, I could have made a lump-sum withdrawal at age 55 without the penalty.

A. There is no exception to the early withdrawal penalty for retirement before the calendar year in which you reach age 55 — mandatory or otherwise. The usual rules apply and, in the case you’ve described, you’ll have wait until you reach age 59½ to make a lump-sum withdrawal without penalty.


About Author

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 fedexperts@federaltimes.com and view his blog at money.federaltimes.com.

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