-
The Forum works well on MOBILE devices without an app: Just go to: https://forum.tsptalk.com
-
Please read our AutoTracker policy on the IFT deadline and remaining active. Thanks!
-
$ - Premium Service Content (Info) | AutoTracker Monthly Winners | Is Gmail et al, Blocking Our emails?
Find us on: Facebook & X | Posting Copyrighted Material
-
Join the TSP Talk AutoTracker: How to Get Started | Login | Main AutoTracker Page
-
The Forum works well on MOBILE devices without an app: Just go to: https://forum.tsptalk.com ...
Or you can now use TapaTalk again!
TSP penalty for withdrawl
- Thread starter dave123
- Start date
There are ways to withdraw without a penalty, depending on how you withdraw - lump sum, annuity payments, etc.
Unfortunately the tsp.gov site doesn't have a whole lot of information...
https://www.tsp.gov/living-in-retirement/making-a-withdrawal/
And it may be more of a question for an accountant.
As for law enforcement, I couldn't find anything on tsp.gov, but I found this...
Unfortunately the tsp.gov site doesn't have a whole lot of information...
https://www.tsp.gov/living-in-retirement/making-a-withdrawal/
And it may be more of a question for an accountant.
As for law enforcement, I couldn't find anything on tsp.gov, but I found this...
Thank you both. I was a federal correctional officer. I think that is included from what I can tell; however I wanted to be 1000% sure as I'm hoping to pull a bunch of money to use up my solar credit from installing solar panels without the penalty. This could be a chance to get the money without taxes.
I called TSP and they said call the IRS. I called the IRS and was on hold until my phone battery died.
I'm off to check out your recommendations. I just need to know for sure...
I called TSP and they said call the IRS. I called the IRS and was on hold until my phone battery died.
I'm off to check out your recommendations. I just need to know for sure...
Important Tax Information About Payments From Your TSP Account
See page 5
b. Additional 10% Early Withdrawal Penalty Tax If you receive a TSP distribution 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 taxable portion of the distribution not transferred or rolled over. The additional 10% tax generally does not apply to• payments made after you separate from service during or after the year you reach age 55 (or the year you reach age 50 if you are a public safety employee as defined in section 72(t)(10)(B)(ii) of the Internal Revenue Code);
See page 5
b. Additional 10% Early Withdrawal Penalty Tax If you receive a TSP distribution 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 taxable portion of the distribution not transferred or rolled over. The additional 10% tax generally does not apply to• payments made after you separate from service during or after the year you reach age 55 (or the year you reach age 50 if you are a public safety employee as defined in section 72(t)(10)(B)(ii) of the Internal Revenue Code);
rangerray
Active member
[FONT="](From IRS Publication 575)
Additional exceptions for qualified retirement plans.
The tax doesn’t apply to distributions that are:
[/FONT]
[FONT="]Separation from service.
In order to meet the requirements for the first exception in the list above, you must have separated from service in or after the year in which you reach age 55 (or age 50 for qualified public safety employees). You can’t separate from service before that year, wait until you are age 55 (or age 50 for qualified public safety employees), and take a distribution.
[/FONT]
[FONT="]Example.
George separated from service from his employer at age 49. In the year he reached age 55 he took a distribution from his retirement plan. Because he separated from service before he reached age 55, he didn’t meet the requirements for the exception for a distribution made from a qualified retirement plan (other than an IRA) after separating from service in or after reaching age 55 (age 50 for qualified public safety employees).
[/FONT]
[FONT="]Qualified public safety employees.
If you are a qualified public safety employee, distributions made from a governmental retirement plan aren’t subject to the additional tax on early distributions. You are a qualified public safety employee if you provided police protection, firefighting services, or emergency medical services for a state or municipality, and you separated from service in or after the year you attained age 50.
For tax years beginning after 2015, the definition of qualified public safety employees is expanded to include the following.
[/FONT]
Additional exceptions for qualified retirement plans.
The tax doesn’t apply to distributions that are:
- From a qualified retirement plan (other than an IRA) after your separation from service in or after the year you reached age 55 (age 50 for qualified public safety employees) (see Separation from service , later);
- From a qualified retirement plan (other than an IRA) to an alternate payee under a qualified domestic relations order;
- From a qualified retirement plan to the extent you have deductible medical expenses that exceed 7.5% of your adjusted gross income, whether or not you itemize your deductions for the year;
- From an employer plan under a written election that provides a specific schedule for distribution of your entire interest if, as of March 1, 1986, you had separated from service and had begun receiving payments under the election;
- From an employee stock ownership plan for dividends on employer securities held by the plan;
- From a qualified retirement plan due to an IRS levy of the plan;
- From elective deferral accounts under 401(k) or 403(b) plans, or similar arrangements, that are qualified reservist distributions;
- Phased retirement annuity payments made to federal employees. See Pub. 721 for more information on the phased retirement program; or
- From a qualified retirement plan (other than an IRA) for a qualified birth or adoption. For more information, see Qualified birth or adoption distribution, later.
[/FONT]
[FONT="]Separation from service.
In order to meet the requirements for the first exception in the list above, you must have separated from service in or after the year in which you reach age 55 (or age 50 for qualified public safety employees). You can’t separate from service before that year, wait until you are age 55 (or age 50 for qualified public safety employees), and take a distribution.
[/FONT]
[FONT="]Example.
George separated from service from his employer at age 49. In the year he reached age 55 he took a distribution from his retirement plan. Because he separated from service before he reached age 55, he didn’t meet the requirements for the exception for a distribution made from a qualified retirement plan (other than an IRA) after separating from service in or after reaching age 55 (age 50 for qualified public safety employees).
[/FONT]
[FONT="]Qualified public safety employees.
If you are a qualified public safety employee, distributions made from a governmental retirement plan aren’t subject to the additional tax on early distributions. You are a qualified public safety employee if you provided police protection, firefighting services, or emergency medical services for a state or municipality, and you separated from service in or after the year you attained age 50.
For tax years beginning after 2015, the definition of qualified public safety employees is expanded to include the following.
- Federal law enforcement officers,
- Federal customs and border protection officers,
- Federal firefighters,
- Air traffic controllers,
- Nuclear materials couriers,
- Members of the United States Capitol Police,
- Members of the Supreme Court Police, and
- Diplomatic security special agents of the United States Department of State.
[/FONT]
Bullitt
Well-known member
Dave were you a BOP'er? Hard to believe you're just figuring out today that you might be eligible to pull your money without penalty.
What age did you start and how many years did you have in the covered position? If your FERS annuity is based off 1.7% a year and you retired with 20 years in a special category employee position, then I'd say you are covered.
What age did you start and how many years did you have in the covered position? If your FERS annuity is based off 1.7% a year and you retired with 20 years in a special category employee position, then I'd say you are covered.
Thank you. That list you have, Rangerray, does not actually come out and say corrections, but everything does point that way. I remember when looking up my pay, I used the LEO chart.
Good to "see" you again, Bullitt. I actually look forward to you throwing cold water on my plans
But you know your stuff and I welcome your wisdom. Yes, I'm retired BOP (recreation, but still LEO). I'm FERS and I had over 20 years - I'm also 58 years old - so it appears I meet all the criteria.
Yeah, I never had any intention of touching the money this soon, so I did not care about the penalty. So far, I'm having no trouble living on my pension and part time job and have no need for TSP money now. Things changed when I went solar and saw this as a "free" withdrawal with no taxes. The plan is to take it out tax free and stick it into some mutual funds. Feel free to critique that plan - I'm all ears if anyone sees a flaw.
Good to "see" you again, Bullitt. I actually look forward to you throwing cold water on my plans
But you know your stuff and I welcome your wisdom. Yes, I'm retired BOP (recreation, but still LEO). I'm FERS and I had over 20 years - I'm also 58 years old - so it appears I meet all the criteria.Yeah, I never had any intention of touching the money this soon, so I did not care about the penalty. So far, I'm having no trouble living on my pension and part time job and have no need for TSP money now. Things changed when I went solar and saw this as a "free" withdrawal with no taxes. The plan is to take it out tax free and stick it into some mutual funds. Feel free to critique that plan - I'm all ears if anyone sees a flaw.
Thank you. That list you have, Rangerray, does not actually come out and say corrections, but everything does point that way. I remember when looking up my pay, I used the LEO chart.
Good to "see" you again, Bullitt. I actually look forward to you throwing cold water on my plans
Yeah, I never had any intention of touching the money this soon, so I did not care about the penalty. So far, I'm having no trouble living on my pension and part time job and have no need for TSP money now. Things changed when I went solar and saw this as a "free" withdrawal with no taxes. The plan is to take it out tax free and stick it into some mutual funds. Feel free to critique that plan - I'm all ears if anyone sees a flaw.
Dave , as I understand the rules as LEO you can withdraw from the TSP without the 10% penalty but it isn't tax free unless it is a ROTH account? You may want to confirm this with an accountant who is familiar with the TSP rules! Good luck!
@ Scout. Just worried about the penalty, the tax would be eaten up by my solar credit.
@bullitt. Install is done, I'm just waiting on the power company to put in a bi-directional meter for it to work. hopefully this coming week. Bullitt, I noticed above you said Hard to believe you're just figuring out today that you might be eligible to pull your money without penalty. Why did you use the word "might"?
A call to the TSP could not verify, she told me to call the IRS, who just left me on hold. This really looks like it will not have a penalty, I just want to be %1000 sure.
@bullitt. Install is done, I'm just waiting on the power company to put in a bi-directional meter for it to work. hopefully this coming week. Bullitt, I noticed above you said Hard to believe you're just figuring out today that you might be eligible to pull your money without penalty. Why did you use the word "might"?
A call to the TSP could not verify, she told me to call the IRS, who just left me on hold. This really looks like it will not have a penalty, I just want to be %1000 sure.
Bullitt
Well-known member
Don't read too much into it. It was an assumption on my part. I figured people talked about it every now and then while on the clock, especially when you said you were a CO (midnight shifts, passing time in the watch tower), but if you're recreation you may have only had the inmates to talk to.
PessOptimist
Well-known member
Should the inmates automatically be enrolled in TSP since they are sort of federal employees? I am going to ask some of my favorite congresspeople this. They probably will think it's a good idea. This is a joke (I hope) and I am ready for the rebuttals.
Back to the subject, it looks good for you dave123. Good luck with the plan and the solar. Please let us know how it works out since on line you see best thing since liver pills to don't ever do it.
PO
Back to the subject, it looks good for you dave123. Good luck with the plan and the solar. Please let us know how it works out since on line you see best thing since liver pills to don't ever do it.
PO
I have an update on the solar project (and a request for opinions) here:
TSP Tax Question - Page 2 (tsptalk.com)
TSP Tax Question - Page 2 (tsptalk.com)
Update, I transferred it all into an IRA with etrade and I manage it myself. No penalty.
Thought I would drop an update on the solar as well. It's March of 2025. I'm still paying the minimum to be connected to the power company (33.00) a month. That and the payment for the solar panels combined is much less than what my power bill was when I installed them several years ago (and they have had at least 2 rate hikes since then).
I'm still using my solar tax credits as well, which lowers my federal taxes (it lasts many years, not sure how many).
The only negative, is that the solar industry has had many companies, including mine, go under. There is another company that picked up their customers, and he said that he could help me if I had units fail, and that my parts warranty is still in effect. I did lose the labor portion of my warranty. So, if you go this route, get a company that you believe will stick around.
Thought I would drop an update on the solar as well. It's March of 2025. I'm still paying the minimum to be connected to the power company (33.00) a month. That and the payment for the solar panels combined is much less than what my power bill was when I installed them several years ago (and they have had at least 2 rate hikes since then).
I'm still using my solar tax credits as well, which lowers my federal taxes (it lasts many years, not sure how many).
The only negative, is that the solar industry has had many companies, including mine, go under. There is another company that picked up their customers, and he said that he could help me if I had units fail, and that my parts warranty is still in effect. I did lose the labor portion of my warranty. So, if you go this route, get a company that you believe will stick around.
