The Early Withdrawal Penalty and Federal Law Enforcement Officers

By on March 5, 2015 2:34 PM in Current Events with 0 Comments
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The American Federation of Government Employees (AFGE) persuaded United States Senators Patrick Toomey (R-PA) and Michael Bennet (D-CO) to introduce legislation that would make federal Correctional Officers exempt from the 10% early withdrawal penalty that applies when a federal law enforcement officer retires before the age of 55 and withdraws money from their Thrift Savings Plan (TSP) account.  If this legislation is passed, federal Correctional Officers will no longer have to jump through the hoops of following IRS rule 72(t) in order to avoid the penalty.

To follow 72(t) you must take a series of substantially equal monthly payments (SOSEPP) for the longer of five years or until you reach the age of 59 ½, whichever is longer, in order to avoid the early withdrawal penalty.

Correctional Officers are an important part of the federal law enforcement community and deserve this exemption. But, (Hey AFGE!) what about CBP Agents, FBI Agents, those who work for the IG’s office in numerous agencies and all other federal LEOs?  Are they chopped liver?

Well, all is not lost!

The Federal Law Enforcement Officers’ Association (FLEOA) introduced a bill in the last session of Congress (HR-4634) to exempt all federal law enforcement officers from the early withdrawal penalty.  They will be re-introducing the same bill in this session of Congress with bi-partisan support.  One bill that covers all federal law enforcement officers makes more sense than a separate bill for each agency’s LEOs.  You can find out the status of FLEOA’s effort at http://www.fleoa.org/news-story.aspx?id=4277.

Agencies can request to have John Grobe, or another of Federal Career Experts' qualified instructors, deliver a retirement or transition seminar to their employees. FCE instructors are not financial advisers and will not sell or recommend financial products to class participants. Agency Benefits Officers can contact John Grobe at [email protected] to discuss schedules and costs.

© 2020 John Grobe. All rights reserved. This article may not be reproduced without express written consent from John Grobe.

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John Grobe is President of Federal Career Experts, a firm that provides pre-retirement training and seminars to a wide variety of federal agencies. FCE’s instructors are all retired federal retirement specialists who educate class participants on the ins and outs of federal retirement and benefits; there is never an attempt to influence participants to invest a certain way, or to purchase any financial products. John and FCE specialize in retirement for special category employees, such as law enforcement officers.

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