Re: TSP penalty for withdrawl
(From IRS Publication 575)
Additional exceptions for qualified retirement plans.
The tax doesn’t apply to distributions that are:
- From a qualified retirement plan (other than an IRA) after your separation from service in or after the year you reached age 55 (age 50 for qualified public safety employees) (see Separation from service , later);
- From a qualified retirement plan (other than an IRA) to an alternate payee under a qualified domestic relations order;
- From a qualified retirement plan to the extent you have deductible medical expenses that exceed 7.5% of your adjusted gross income, whether or not you itemize your deductions for the year;
- From an employer plan under a written election that provides a specific schedule for distribution of your entire interest if, as of March 1, 1986, you had separated from service and had begun receiving payments under the election;
- From an employee stock ownership plan for dividends on employer securities held by the plan;
- From a qualified retirement plan due to an IRS levy of the plan;
- From elective deferral accounts under 401(k) or 403(b) plans, or similar arrangements, that are qualified reservist distributions;
- Phased retirement annuity payments made to federal employees. See Pub. 721 for more information on the phased retirement program; or
- From a qualified retirement plan (other than an IRA) for a qualified birth or adoption. For more information, see Qualified birth or adoption distribution, later.
Separation from service.
In order to meet the requirements for the first exception in the list above, you must have separated from service in or after the year in which you reach age 55 (or age 50 for qualified public safety employees). You can’t separate from service before that year, wait until you are age 55 (or age 50 for qualified public safety employees), and take a distribution.
Example.
George separated from service from his employer at age 49. In the year he reached age 55 he took a distribution from his retirement plan. Because he separated from service before he reached age 55, he didn’t meet the requirements for the exception for a distribution made from a qualified retirement plan (other than an IRA) after separating from service in or after reaching age 55 (age 50 for qualified public safety employees).
Qualified public safety employees.
If you are a qualified public safety employee, distributions made from a governmental retirement plan aren’t subject to the additional tax on early distributions. You are a qualified public safety employee if you provided police protection, firefighting services, or emergency medical services for a state or municipality, and you separated from service in or after the year you attained age 50.
For tax years beginning after 2015, the definition of qualified public safety employees is expanded to include the following.
- Federal law enforcement officers,
- Federal customs and border protection officers,
- Federal firefighters,
- Air traffic controllers,
- Nuclear materials couriers,
- Members of the United States Capitol Police,
- Members of the Supreme Court Police, and
- Diplomatic security special agents of the United States Department of State.
Scott Harrison
Senatobia, MS
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