Distributions

L1: DistributionsI”m retired, not yet 59.5 years old.
I”ve been told that equal distribution over 5 yearsof my government sponsored Thrift Savings Plan would result in elimination of the 10% early withdrawal penalty.
Is that true?
I”ve read 2002-62 and thus far haven”t been able to decipher it.

2007-02-28 18:23, By: knight, IP: [205.188.116.133]

L2: DistributionsFirst of all, if you separated from service in the year you attained age 55 or later, you can get distributions from that employer”s plan with no penalty. You would not need a 72t plan and could set up installments according to what the plan offers. You don”t have to meet an IRS requirements, just the plan requirements for the options they offer. This is the first thing you should check out before settling for a 72t plan.
As for the TSP, I got the impression from their website that they do offer a 72t plan as well. You should contact them directly to see if this is correct and what they require in the way of documentation to set it up. You must then take the exact required amount each year for the longer of 5 years or until you reach 59.5, whichever is longer. Most retirees opt to rollover their TSP or 401k to an IRA and then set up the 72t from the IRA account. They can also partition the IRA into separate accounts and establish an account balance for the 72t IRA account to match the distribution amount needed to live on. The other IRA that is not part of the plan is available for emergency use without affecting the 72t plan.
2007-03-01 12:44, By: Alan S., IP: [24.116.66.98]