Q: Regarding your article on withdrawing from the TSP, does this mean if someone retires early at age 55, he can take a huge withdrawal from his TSP account without any penalities?
A: Yes that is correct.
“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 that are: Paid after you separate from service during or after the year you reach age 55.”
Keep in mind you’re still subject to the same withdrawal rules, so if you take a lump sum withdrawal, you may not be able to take another. The next time you go to take a withdrawal you will have to take the remaining balance. Reference: http://www.fedsmith.com/2014/07/22/your-tsp-withdrawal-options/