There are special retirement rules for FERS and CSRS employees covered under the Special Retirement Provisions. This can cause a challenge when these employees become eligible to retire because they can become eligible at a younger age and have a mandatory retirement age. Read on to learn more about special retirement provision rules and Thrift Savings Plan (TSP) rules.
Special Retirement Provisions Rules
Employees in these positions are eligible to retire at age 50 with 20 or creditable service or at any age with 25 years of creditable service. As far as the mandatory retirement age, employees must retire by the last day of the month in which they reach age 57 for Law Enforcement Officers, Firefights, and Military Reserve Technicians, and age 56 for Air Traffic Controllers.
Thrift Savings Plan Rules
There are special rules when taking a withdrawal from your Thrift Savings Plan (TSP). You must be at least 59 ½ and if you are younger, you could face a 10 percent early age withdrawal penalty plus a possible state penalty. The exception is if you retire or separate from service in or after the year you turn 55. In this case, the TSP early age withdrawal penalty is waived.
Because these safety officers are eligible to retire at an age younger than 55, they were hit with an early withdrawal penalty until they reached 59 ½. The Defending Public Safety Employee’s Retirement Act grants an exception to the early age withdrawal penalty for certain public safety officers. As of January 1, 2016, a public safety officer who retires or retired at age 50 or older can include TSP income without consequences of the early age withdrawal penalty. This can also be included in TSP income plans from day 1. These new rules only cover withdrawals from a TSP, so if you transfer your TSP to an IRA or another outside source, you will lose that waiver.
The Defending Public Safety Employees’ Retirement Act only specifically mentions Law Enforcement Officers, Firefighters, Customs and Border Protection Officers, and Air Traffic Controllers.
The TSP modernization act made some big changes to the rules previously set by the TSP.
