TSP early withdrawal penalty and DSR

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I have a dual status military tech discontinued service retirement – not for cause – prior to age 55. How does the TSP early withdrawal penalty apply in this case?

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Asked on November 12, 2019 6:51 pm
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To withdraw your TSP without incurring the 10% early withdrawal penalty, you must separate from service during or after the year you reach age 55 or the year you reach age 50 if you are a public safety employee as defined in section 72(t)(10)(B)(ii) of the Internal Revenue Code which includes federal law enforcement officers, fire fighters, Customs and Border Patrol Officers, and Air Traffic Controllers. It does not include Military Reserve Technicians. Or if you elect annuity payments or paid as substantially equal payments over your life expectancy.

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Answered on November 12, 2019 7:08 pm
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The only other way around the 10% penalty would be to set up a “72t” plan based upon substantially equal payments based upon life expectancy. However, there are caveats: by setting up such a plan, you are required to take payments for the longer of 5 years or until attainment of age 59 1/2, and, most importantly, if you mess the plan up or bust it, you are charged the 10% penalty retroactively plus retroactive interest on the penalty back to the year of the first payment.

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Answered on November 13, 2019 10:56 pm
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Customs and Border Patrol Officers, and Air Traffic Controllers. It does not include Military Reserve Technicians. Or if you elect annuity payments or paid as substantially equal payments over your life expectancy.

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Answered on December 9, 2019 11:13 am