Q. I am a veteran and a federal employee at a VA Hospital. I am under FERS. I just turned 56 on July 30, 2016, and I have a total of 27 years-plus of federal service. Last August I filed my disability retirement because of my disabilities, and the papers are still being processed. Hopefully they will finalize it by next month or this month. If I withdraw all my TSP (lump sum), will there be a penalty?
A. Withdrawals taken after separation are exempt from the penalty if you are, or were, separated from service during the calendar year in which you reach age 55. This includes post-separation withdrawals taken before your 55th birthday and during that same calendar year.