L1: 10% penaltyI am an Air Traffic Controller with the FAA and we have early retirement like LEO and FF. My question is am I exempt from paying the 10% penalty if I withdraw from my TSP at age 50 without doing a SEPP?
KO2013-05-20 15:28, By: Docktoro1, IP: [22.214.171.124]
L2: 10% penaltyPublic safety officials are exempt from the 10% penalty for early distributions after age 50. I think that you would be included in this category, but I would double check with the plan administrator, FAA, etc.2013-05-20 22:11, By: dlzallestaxes, IP: [126.96.36.199]
L3: 10% penaltyAs I understand it, the exemption is for “state” not “federal” PSOs. See question #6 in the IRS Bulletin (Site does not allow links, so search for: “Internal Revenue Bulletin: Notice 2007-7 Miscellaneous Pension Protection Act Changes”)2013-05-21 13:08, By: JimE, IP: [188.8.131.52]
L4: 10% penaltyThe TSP is not a defined benefit plan, and the exception in Sec 72(t)(10) is limited to defined benefit plans. In addition, you are not considered a PSO as you are not a state employee, and the job description also appears not to qualify under 72(t)(10) even if you were a state or state agency employee.2013-05-21 23:33, By: Alan S, IP: [184.108.40.206]
L5: 10% penaltyI’ve done some research on the tax preparer side and would like to share the following information and links (which I’m supposed to be able to post).
Unless you can get some favoable information from OMB on this subject, it looks like Federal employees, eventhough they may perform similar jobs as the Non-Federal sector, you don’t get a break for legally retiring early at age 50. Unless you delay retirement until the year you turn age 55, you will have to set up a SEPP Plan to avoid the 10% penalty.
The TSP website and the C/S guy I talked with at TSP is “silent” on the age 50 retirement situation, and only addresses the age 55 retirement.The following links should be helpful:
Here are the general rules for 401(a) withdrawals:
Here is an IRS page that addresses withdrawals for age 50 and older for public safety employees:
I hope this information helps.
Jim F2013-05-23 14:45, By: Jim F, IP: [220.127.116.11]