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Federal Employees Benefits Q &A

Do you have questions about your federal employee CSRS or FERS pension/annuity or federal employee retirement planning? Concerns about your Thrift Savings Plan (TSP) account or what about federal employee pay and leave issues?

Ask your question here.

The Q&A forum is moderated by Ed Zurndorfer -- an expert on federal employee benefits -- and a Certified Financial Planner, chartered life underwriter and chartered financial consultant in Maryland.

Zurndorfer is also the author of several federal employee benefits guides published by Federal Employees News Digest.

Your question will be put into a message queue and submitted for review. We cannot guarantee that all questions will be answered, however any answered questions will appear below, and some will also be featured in our daily Federal Daily e-newsletter (Subscribe here). Members of Federal Soup will not be able to submit replies to the questions posted, as we leave the replies for the moderator only.

Please do not submit employee benefits questions to the webmaster or the forum moderator.

Note: FederalSoup.com has attempted to compile information that is as accurate and current as possible for federal employees. Federal policies, laws, regulations, statistics and addresses continually change. Therefore, no warranties are made as to the accuracy or completeness of the information presented in this column. If additional clarification or information is needed, it is suggested that competent and professional assistance be sought. Mr. Zurndorfer does not moderate other forums on FederalSoup and will not reply to general FederalSoup inquiries submitted in this Q&A forum.

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#1 Posted : Tuesday, May 22, 2007 10:51:49 PM(UTC)

Rank: Newbie

Groups: Registered
Joined: 3/4/2003(UTC)
Posts: 5

Ed, back on May 16, 2005 you posted the below reply to a question on 72T rule.

You are on the right track. Internal Revenue Code Section 72t allows for pre-age 59.5 penalty-free withdrawals from one's qualified retirement plan or traditional IRA. In 1989, the IRS issued Notice 89-25 in which they explained how Code Section 72t may be implemented; namely, how one's monthly payments are computed: (1) Amortization; (2) Annuitization or (3) Life expectancy. It is the life expectancy method that allows TSP participants younger than age 55 and who retired or left federal service to receive penalty-free monthly payments

My question is, concerning this IRS Rule, it is now May 2007, is the life expectancy method (option 3 from above) the only method that allows pre age 55 to withdraw penalty free monthly payments from TSP or can a person use the other two methods by doing the calculations themsleves and submitting to TSP once a year until you hit that magic age of 59.5?

I am a LEO that will retire at age 53 with 25 years.

Thanks in advance. Your column is greatly appreciated.
Ed Zurndorfer  
#2 Posted : Friday, May 25, 2007 5:58:05 AM(UTC)
Ed Zurndorfer

Rank: Senior Member

Groups: Registered
Joined: 9/10/2001(UTC)
Posts: 4,414

Yes, the TSP does allow the use of the amortization and the annuitization methods.
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