Has something changed? Withdrawel age.

[Benjerman]

Has something changed with TSP withdrawel age? I keep seeing on Fedweek an article saying we can withdraw our funds at age 55 without penalty as long as you retire at this time. It says that TSP participants can do this but most other IRA account particapants are still required to wait until age 59.5 yrs old. If so, it is a gift from god for me.

[mjedlin66]

Well the TSP follows the laws for 401(k) plans, not IRAs.

But the 59.5 rule is for the Roth tax treatment.

And your Roth TSP funds cannot be withdrawn before age 59.5 without penalty, unless you qualify under some special rule.

Your traditional funds CAN be pulled starting at age 55 if you are retired.

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

"Additional 10% Early Withdrawal Penalty Tax If you receive a TSP distribution before you reach age 59 ½, 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 (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); • annuity payments; • automatic enrollment refunds; • made as a result of total and permanent disability;3 • made because of death; • made from a beneficiary participant account; • made in a year you have deductible medical expenses that exceed 10% of your adjusted gross income (7.5% if you or your spouse is 65 or over);4 • ordered by a domestic relations court; or • paid as substantially equal payments over your life expectancy."

[ArrieS]

And your Roth TSP funds cannot be withdrawn before age 59.5 without penalty, unless you qualify under some special rule.

You may be able to get around this if you transfer it to a ROTH IRA. Contributions can be withdrawn tax free. So if you rollover the ROTH portion into a ROTH IRA, maybe you can withdrawal the contributions portion. But you would have to ask an expert.

https://www.rothira.com/blog/can-you-re ... tributions

Can I Withdraw Roth IRA Contributions Early?
Absolutely. You can withdraw your Roth IRA contributions—all of them—at any time without paying any taxes, penalties, or fees.

[Benjerman]

Music to my ears.

[evilanne]

You can withdraw from IRA before 59.5 under one of the exceptions--primarily SEPP or 72t rules but you do have more flexibility under TSP if you retire at age 55 or later. If you have any in Roth TSP you can roll over any Roth portion to an outside IRA while still subject to the proportional rules. Note: If you plan on taking lump sum payment--currently you can only do this once; do it before you opt for monthly payment. Also, any money withdrawn is subject to ordinary income tax.

[jimcasada]

I believe there is still a provision in the IRA rules that will allow you to make an one time penalty free withdraw at 55 or older, if you leave or change employers in that same year. I think they passed that rule back in 2008, when several older folks were getting laid off during the last recession, but you don't have to be fired to take advantage of it. I used it back in 2011 when I change jobs, and used the funds to buy a condo closer to my new employer. There's also a provision that allows you to withdraw any amount of funds from an IRA at any time without penalty, as long as you can replace it back into your account within 45 days. That's good to keep in mind in case of a sudden emergency comes up.

[rikarus]

I thought you could withdraw from your tsp regular at MRA with no penalties if you were over 30 years?

[evilanne]

Rikarus, If MRA is 55 (50 for LEO) or older no penalties. If you retire under 55 (or 50 for LEOs), you can access using exceptions but the rules are stricter.

You really need to go to specific guidance for your situation at TSP or IRC/IRS for IRAs. There are exceptions available in the law that are not currently available in TSP. Make sure you understand before you leap

[rikarus]

That's what I thought Evilanne, I will have 38.5 at 56.5, so I am done and done!!! 5 years and counting!

[Koastiek]

Here is the NEW withdrawal Fact Sheet that came out in May 2018.
https://www.tsp.gov/PDF/formspubs/tspfs10.pdf

This is just another site explaining some of the info.
https://federalnewsradio.com/tsp/2018/0 ... l-changes/

[inla$vega$]

Here are a couple of quotes from the TSP's NEW withdrawal Fact Sheet.

1 - We all have the opportunity to comment on the new TSP regulations.

"Also, as a government agency, we have to publish any
policy decisions that are necessary to implement new
legislation in publicly accessible regulations. So we have
to publish new regulations in order to allow the new
options. We also have to have a public comment period
and take the time to consider comments before we make
final regulatory changes."

2- Changes have a two year deadline so plan accordingly.

"We asked Congress for these new withdrawal options, so
rest assured that we’re motivated to enact them as soon as
possible. We intend to have the changes in place before
the two-year deadline but don’t yet have a specific date
to announce."

[TSPTiming]

Here is the NEW withdrawal Fact Sheet that came out in May 2018.
https://www.tsp.gov/PDF/formspubs/tspfs10.pdf

This is just another site explaining some of the info.
https://federalnewsradio.com/tsp/2018/0 ... l-changes/

I'm hoping that an additional change they make is that they'll implement the ability to make changes to your monthly withdrawal amount online, rather than having to send a notarized paper form as is currently the case (correct me if I'm wrong, that's what I've heard).
My retirement is coming fast in December, so this changes are coming at a perfect time for me.