age you can draw tsp
Before we look at strategies for avoiding the penalty, let’s clear up a misconception that many folks have about the early-withdrawal penalty and the TSP. You are exempt from the penalty if you separate from federal service in the year in which you turn 55 (or later.) That’s age 55, not 59 ½. Employer-sponsored plans, such as the TSP, differ from individual plans, such as an IRA, in many ways; and one of the ways is in when the 10% early-withdrawal penalty applies. Withdrawing from TSP account. Q: I am an employee (Federal Employees Retirement System) at a BRAC-ed installation. Sometime around September 2011, I will be fired. At 56 years old — the age at which I’ll have 29 years’ service — I can retire. A: Since you’ll be separating from FERS service during or following the year in which you reach age 55, you’ll be able to withdraw funds from your TSP account without penalty. The amount you withdraw will be added to your tax return as ordinary income. Funds may be left in your TSP until April 1st of the year following the year you turn age 70 ½, when Required Minimum Distributions (RMDs) must begin. For example: Tim turned 70 ½ this year. His 2012 year end TSP balance is $100,000 and his first RMD will be $3,650. Early Retirement. Some employees are eligible to retire early and withdraw from the TSP without IRS penalty. For example, air traffic controllers, federal firefighters and federal law enforcement officers can retire at any age, provided they have at least 25 years of service. For those with 20 years of experience, retirement age is 50. Contributions, Loans, In-Service Withdrawals, and Court Orders. While in retirement from Government service, you can no longer make contributions to your TSP account, take out TSP loans, or request in-service withdrawals. Also, all court orders against your TSP account must be resolved before you can make a withdrawal. This is 3 years for most federal jobs. Your right about age 59 1/2 to withdraw without penalties. Age 62 in the article you referenced concerns the pension not the TSP. Also, I do not believe you can withdraw from TSP until you have left or retired from your federal job. Post subject: Re: TSP VESTING + MINIMUM AGE FOR DRAWING BENEFITS FROM TSP. With an in-service withdrawal, the money is not paid back. The key feature of the age-based withdrawal is that it is allowed only for those age 59 1/2 and older. You may make only one age-based withdrawal, and it can be for all or part of your account balance. Taking such a withdrawal does not affect your eligibility for a later TSP loan or a financial hardship in-service withdrawal. However, it does affect your withdrawal options after you separate. You can avoid the penalty if you follow a life-expectancy-based withdrawal strategy for the longer of 5 years, or the number of years until you reach the age of 59 ½. In tax parlance, this strategy is known as a series of substantially-equal periodic payments (SOSEPP, or just plain SEPP). Early Withdrawals. Federal employees can withdraw TSP funds at any time. However, withdrawing funds before age 59 1/2 can result in the 10 percent IRS penalty on funds in addition to the federal income taxes. If you are still employed after reaching age 59 1/2, you are entitled to a one-time withdrawal of any or all of your funds without penalty.
Federal employees can withdraw TSP funds at any time, but withdrawing funds before age 59 1/2 can result in the 10 percent IRS penalty on funds in addition to the federal income taxes.