age for tsp withdrawal
QUESTION: I am still working and over age 59-1/2. I am thinking of taking an age-based withdrawal from my Thrift Savings Plan (TSP) account. What can you tell me about this type of withdrawal? ANSWER: You can take only one age-based withdrawal during the time you are actively employed in federal service or as a member of the uniformed services. The TSP Age-Based Withdrawal Option. The Thrift Savings Plan allows actively employed participants to make an age-based withdrawal at age 59 1/2 or higher. This was structured so that these withdrawals would be exempt from early withdrawal penalties generally applying below that age to participants in tax-deferred plans such as the TSP. Your age-based withdrawal is subject to federal income tax and, in some cases, state income tax. Age-based withdrawal payments are considered eligible rollover distributions for federal income tax purposes and are subject to a mandatory 20 percent tax if you make an age-based withdrawal. The TSP will withhold 20 percent for taxes. If you have two separate TSP accounts – a civilian TSP account and a uniformed services account – you can only make an age-based withdrawal from the account associated with your active employment at the time of your withdrawal. Federal Employee's CSRS & FERS Thrift Savings Plan (TSP) Review. The Thrift Savings Plan (TSP) is a retirement savings and investment plan for Federal employees. Congress established the TSP in the Federal Employees' Retirement System Act of 1986. The purpose of the TSP is to provide retirement income. The maximum TSP contribution for 2015 increased to $18,000 and if you are over age 50 add an additional $6,000 catch up contribution if possible. The $18,000 divided by 26 pay periods equals a $692 contribution per pay period plus an additional $230 if you are over age 50. An employee who retires from or leaves federal service is not required to withdraw anything from his or her TSP account until he or she becomes age 70.5. But during the year the TSP participant becomes age 70.5 and every year thereafter, the TSP participant is required to make a required minimum distribution (RMD). This column discusses the RMD rules with respect to the TSP and how the RMD is computed. There is an option to roll over the age-based withdrawal to an IRA or other qualified plan. If you wish to have greater choice in investments than the TSP offers, this is one way to accomplish it. You might also simply want to begin consolidating your retirement investments late in your career. If you receive a TSP withdrawal payment before you reach age 59½, in addition to the regular income tax, you may have to pay an early withdrawal penalty tax equal to 10% of any portion of the payment not transferred or rolled over. You may make only one age-based withdrawal. Taking such a withdrawal does not affect your eligibility for a later TSP loan or a financial hardship in-service withdrawal. However, it can affect your withdrawal options after you separate.
59 1/2 or higher.