Q. I am a 47-year-old air traffic controller. I have completed my 25 years of service and retired Dec. 29. I have been investing in the Thrift Savings Plan my entire career. I want to draw a monthly payment of $1,500. If I do this, is it considered an annuity which I can claim under 72(t)? Or would it be better to buy an annuity equaling the amount I need and let the rest ride until I am 59½?

A. The rules for satisfying the 72(t) exception to the early withdrawal penalty are complex and strict, so you should be careful before beginning. You must take the exact amount calculated using one of three approved methods. If you over- or under-withdraw, you’ll be subject to the penalty. Buying an annuity will satisfy the requirement, but, with interest rates so low, it’s not an attractive time to make this commitment. If you’re not sure what to do, you should seek trustworthy professional help.


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

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