Can You Withdraw from the TSP at Age 55 Without Penalties?

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By on April 29, 2015 in Q&A, Retirement with 2 Comments

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.”

Source: https://www.tsp.gov/PDF/formspubs/tsp-536.pdf

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: https://www.fedsmith.com/2014/07/22/your-tsp-withdrawal-options/

© 2017 Jesse Black. All rights reserved. This article may not be reproduced without express written consent from Jesse Black.

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About the Author

Jesse Black is a financial advisor who specializes in assisting Federal Employees maximize their benefits. He is a Chartered Federal Employees Benefits Consultant and has over ten years industry experience. He has assisted thousands of people, assisted with benefit workshops and has been interviewed by the Wall Street Journal about Federal Benefits.

 

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