Avoid TSP Early Withdrawal Penalty by Rolling into IRA?


I plan to retire at the end of the year at age 56. If I roll a portion of my TSP into an IRA and later take distributions from the IRA, are those distributions subject to a 10% early withdrawal penalty if taken prior to reaching age 59.5, as opposed to TSP distributions which would not be subject to the 10% penalty?

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Posted by (Questions: 1, Answers: 0)
Asked on June 18, 2019 3:35 pm

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Yes they are. When you move money from the TSP into an IRA, that money is then governed by IRA rules. IRA rules provide for an early withdrawal for any withdrawals taken before reaching the age of 59 1/2. If you were to leave your money in the TSP, you would not be subject to the early withdrawal penalty.

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Answered on June 20, 2019 10:13 pm
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401k withdrawal timing rules
If you’re saving in a 401k, you generally cannot take your money out of the 401k, unless you’ve:
Reached age 59½
Left the employer
Become disabled
Passed away (in which case your beneficiaries must begin taking withdrawals)
i believe the same rules apply to IRA’s

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Posted by (Questions: 0, Answers: 1)
Answered on August 21, 2019 7:54 pm