Thread: 59.5 Advice

Originally Posted by ravensfan

Frixxxx,

Just a question on this. Is this bill changing the IRS rules or TSP rules? I ask this because I was in the Military Technician Program and as a CSRS employee (that's the old retirement system for you young folk) I could withdraw from my TSP account without penalty at age 55 as long as my status was "retired". Unfortunately, I learned that even though TSP allowed me to make withdrawals without penalty, the IRS would still penalize you if a withdrawal was made prior to reaching age 59 1/2. So nice for these folks if they can start withdrawing from their accounts at age 50 but keep in mind the IRS will still penalize you.

Ravensfan,

Hmmmmm....Now, I'm retired FERS, not CSRS with a TSP account, AND I'm NOT LEO, so maybe we're talking "apples and oranges"...just posting this for the sake of clarification ! BUT...I have not been penalized by anybody for withdrawing from my TSP at age 57, as long as I had my 30 years, and was above the FERS Minimum Retirement Age (MRA)...i.e. "retired"...which I was/am... That's EXACTLY the reason I didn't roll my entire TSP balance over to my IRA when I retired...I left enough in there to meet my projected withdrawal needs until I turned 59.5 and could start pulling from my IRA without penalty.

I understand the LEO IRS rules may be WAY different...never followed the "72T Withdrawal" discussions much, since it didn't pertain to me

OTOH, I may have guys in trench coats knocking on my door, or black helicopters circling overhead, any minute now

Stoplight...

Originally Posted by BichonFreeze

Do you know if you get penalized for taking out a loan for a mortgage?

One of my co-workers made a loan against his TSP and was not able to repay it before he retired. When he retired, both TSP and the IRS treated the loan like a distribution and therefor both penalized him the FULL amount of the original loan. When he outprocessed he was given the opportunity to pay the loan in full but because of his financial situation was not able to take advantage.

As for taking out a loan for a mortgage, I would read up on the rules for that and then contact TSP, IRS and HRO so you fully understand all aspects of doing so. I think we talked about this once before and I said I was not a big fan of the loan program. But hey if you are young in your career and prospects for continued employment are good then go for it.

Hope this answered your question.

V/r
Ravensfan

TOTALLY AGREE with Ravensfan ! Read up on the rules BEFORE you take out a loan !!! And, if you're a youngster, look at the long-term impact on your retirement balance before you go this route !!! It's tempting, but evaluate your options !!!

OTOH, there ARE "situations" where taking a loan can make sense...in my personal case, I was late in my career, with a large TSP balance...needed cash to make a down payment on my house in FL, because my house in MD had not sold ; took the loan, and once the MD house finally sold, I paid it back as a lump sum...

Worked out good for me, but EVERYONE'S personal situation is different ! Do the math before you decide !!!


Stoplight...