Q: If you have a TSP account and you have been gone from working for the federal government since 2006, can you withdraw your funds without any early withdrawal penalty fees? A: Only if you separated from federal service during or after the year in which you reached age 55, have reached age 59 1/2, withdraw funds using a series of Substantially Equal Periodic Payments, use the money to buy a life annuity, or meet one of the specific exemptions to the penalty, which include disability and certain medical expenses. See the notice at https://www.tsp.gov/PDF/formspubs/octax92-32.pdf for more information.
Browsing: early withdrawal penalty
Q: I am a firefighter about to be forced to retire at 57 years old because of the mandatory retirement age. I plan on taking out my Thrift Savings Plan earnings to buy my house when I retire. Do I still have to pay the 10 percent penalty for withdrawing from my TSP before turning 59 1/2 even though I was forced to retire because of my age? A: Because you are retiring during or after the year in which you reach age 55, your subsequent TSP withdrawals will not be subject to the early withdrawal penalty.
Q: My position was eliminated when I was 51 years old. I retired with more than 30 years of service. I would like to withdraw all of my funds from the Thrift Savings Plan; will I be required to pay the 10 percent federal penalty if money is taken out prior to age 59 1/2? A: Unless you meet one of the special exceptions to the early withdrawal penalty, you will have to pay it. For details, see the tax notice regarding distributions from your TSP account at the TSP website.
Q: I turned 55 this year and just applied for disability retirement under the Federal Employees Retirement System. I have large bills I want to pay off. My income will drop the first year, then will decrease $1,000 the following year before continuing at that rate. I realize if I keep my Thrift Savings Plan or roll it over once I leave service, I will not be able too take a loan on it. I realize I will need to pay my fair share of taxes, but is there a way I can work it out that I can take…
Q: Your response to an earlier question on Voluntary Early Retirement Authority/Voluntary Separation Incentive Payments puzzles me. If a federal employee is eligible for a retirement annuity under the Federal Employees Retirement System despite the fact they are taking an VERA/VSIP, why would there be a penalty for “early” withdrawal of TSP? A: I think that I clearly stated a fact (“There is nothing in your question that will exempt you from the early withdrawal penalty.”) that answers your question.
Q: I plan to take the Voluntary Early Retirement Authority/Voluntary Separation Incentive Payments at my organization. Because I will be 50 years old when I retire, I am entitled to the entire balance in my Thrift Savings Plan account; since I am retiring, does the penalty still apply? A: There is nothing in your question that will exempt you from the early withdrawal penalty.