Q: I’m currently 51 years old, planning to retire the year I turn 55. My whole career has been fire fighter covered (it will be 33 years). I hope to work part time after retirement. Will the social security supplement be subject to the social security earnings test? I thought I heard Law Enforcement and Fire Fighter retirees were exempt from that.
If I understand correctly, I can start withdrawing funds from my TSP the year I turn 55 without getting hit with the withdrawal penalty… Is this correct?
A: Special category employees, such as law enforcement officers and firefighters are exempt from the earnings test on their supplement only until they reach their “Minimum Retirement Age” (MRA). MRA is a concept that generally applies to non-special category employees, but it does affect the earnings test on the supplement for folks such as yourself. Your MRA is considered to be 56. Therefore, anything you earn up until you turn 56 will not be subject to the earnings test (currently you would lose $1 for every $2 you earn over $15,480), but what you earn after that time will be.
Regarding the early withdrawal penalty for the TSP. Anyone who separates and withdraws their money in the year in which they turn 55 or later will not be subject to the penalty. The rules for employer sponsored plans, such as the TSP are different from the rules for IRAs.
Sorry to disappoint you regarding the earnings test.