Should read TSP withdraw darn autocorrect
Fellow law enforcement and firefighters see 2010 IRS publication 575 page 31 we are exempt from 10% penalty ON TOP withdraw at age 50. Where is the TSPpublication on this? Am I reading it wrong? Google it and let me know ur thoughts and opinions. Thanks dhstdog
Should read TSP withdraw darn autocorrect
It states State or Municipality Public Safety Employee. They did not include "Federal." I was told (by my personnel office) we as Fed's don't qualify. A friend however tried it, appealed the bill for a 10% penalty after his lump sum withdrawal at age 50, brought doc's to his meeting with the IRS and they told him congrat's. No 10% penalty. He qualified. He said the key was a letter or certificate from your personnel office stating you were LEO.
I guess it's a crap shoot. You might win, but you might lose.
Actually it reads OR state municipality ur or is in the wrong place
Not sure what you are reading. Here is the quote from page 31 which defines a Public Safety Officer. My or is exactly where the the IRS has it?
"You are a qualified public safety employee if you provided police
protection, firefighting services, or emergency medical
services for a state or municipality."
http://www.irs.gov/pub/irs-pdf/p575.pdf
I did a google search. Here is some more information from IRS Notice 2007-7, Miscellaneous Pension Protection Act Changes
http://www.irs.gov/pub/irs-drop/n-07-07.pdf
Page 4 has some info, here is a short clip. Clearly, Feds' are not included.
Q-6. Who is a qualified public safety employee?
A-6. For purposes of § 72(t)(10), the term “qualified public safety employee”
means an employee of a State or of a political subdivision of a State (such as a county
or city) whose principal duties include services requiring specialized training in the area
of police protection, firefighting services, or emergency medical services for any area
within the jurisdiction of the State or the political subdivision of the State.
Last edited by Kaufmanrider; 01-28-2011 at 08:50 PM. Reason: Add Info
Hi dhstdog,
(by your username, it appears we hail from the same agency)
I retired FERS from a Fed LEO career a year and a half ago at age 49 & researched this extensively. (search for other threads on it on here & on FederalSoup.com)
If you retire as an LEO/ATC/FF before the year you turn 55 the only ways I have found one can access their TSP monies before age 59.5 and avoid the 10% penalty are as follows:1. Use some or all of your TSP monies to buy an annuity from Metropolitan Life Insurance Company (MetLife is the TSP contracted annuity provider)2. Tell TSP you want "life-expectancy" payments from your TSP account. You must continue these payments until at least 59.5 at which time you can change the withdrawal method. (this is what I did)Personally, I don't know why NARFE hasn't been on top of this to get some legislation going to fix this problem of the 10% penalty for early retiring Federal LEO's; ATC's; & Firefighters. Nor why they didn't long ago (when the economy was better) lobby for legislation to get us the 1.7% retirement calculation for those covered years over 20 that we put in and that we paid in extra for. Those two items don't even appear to be on NARFE's radar screen, which is one of the reasons I am not a member.
3. Roll some or all of your monies out to one or more IRA's & set up 72t payments for yourself (kind of complicated & you could have IRS troubles if you don't do it right - go to www.72t.net for further info)
4. Roll some or all of your monies out of TSP into an IRA & then use them to purchase an annuity from a company of your choice.
Last edited by Texarkandy; 02-01-2011 at 09:52 AM.
"Qualified public safety employees. If you are a qualitfied public safety employee, distributions made from a defined benefit pension plan are not subject to the additional tax on early distributions."
The TSP is not a defined benefit pension plan, thus as a FED you are not covered by this. I always thought FLEOA should take this up to try and get this changed for the TSP and FEDs.
It doesn't make sense since retired FED LEOs do qualify for the tax reduction on health care and LTC premiums.
My guess is neither NARFE nor FLEOA cares enough about the issue just yet to put any effort toward correcting it because there aren't enough retired FERS LEO's yet and thus those currently affected by this issue are a miniscule percentage of their dues paying membership.
What I'm about to say only relates to the current topic, however, its
worth mentioning too. Only "DISABLED" LEO's can pull their money out
of the TSP without that 10% penalty. If by definition, your 100% totally
disabled (as I am), the Tax Software I use automatically states that I was
not subject to such a penalty for that reason.
FERS Retirement on the otherhand has just got better for those who are
disabled. In the past, disabled LEO's "LOST" the 1.7% calculation if forced
to retire on disabilty. Luckily, (in mid 2010) that has all changed. The Law
now provides Disabled LEO's the 1.7% calculation within all calculations.
Those who were already disabled before the Law was enacted (like me)
need to go to the OPM website and look up EDSA. They will check to see
if you qualify and change your current benefits (retro to the bill) to the
new formula. The checking process will take a long time (10-12 months)
due to what I believe is "shorthandedness".
Please forgive me for taking the 10% Penalty Thread and using it for this
information. I believed it might find more retired or close to retired LEO's
this way.
Mike Miles from Federal Times disagrees with this premise:
from: http://blogs.federaltimes.com/federal-money/?s=public+safety+officer
" the exclusion only applies to early distributions from defined benefit plans, and the TSP is a defined contribution plan. Either of these facts alone will disqualify the exception. You may want to review IRS Notice 2007-7 for confirmation."
Official Retirement Date: 06-31-2014!
S&P500 (C Fund) (delayed) (Stockcharts.com Real-time) |
DWCPF (S Fund) (delayed) (Stockcharts.com Real-time) |
EFA (I Fund) (delayed) (Stockcharts.com Real-time) |
BND (F Fund) (delayed) (Stockcharts.com Real-time) |
||
Yahoo Finance Realtime TSP Fund Tracking Index Quotes |
Bookmarks