Early withdrawl of TSP (Thrift Savings Plan) funds

[abercrombie]

From theysaid:

Gordon

You mention in your 10/12 post that the IRS Guide for Fed. Retirees
states that firefighters retiring at age 50 are not subject to the 10% penalty
for early withdrawal of TSP funds. Could you please provide the
document and reference? Thanks.


airtac

[abercrombie]

From theysaid:

The new changes to pension rules (the 10% penalty exemption age 50, FEHBA and LTC premiums pre-tax) are not found in the link I posted. That is the 2006 guide. The 2007 guide is not out yet. The changes are from the Pension Protection Act of 2006. Sec 828 for the TSP penalty change and Sec 845 for the health insurance premiums. It applies to all retired firefighters state and local too, not just Feds. Regardless of how one otherwise feels about Bush, this bill is a nice present for retired firefighters and cops.

For all the Fed retirees who have not heard yet -- the 2008 COLA for CSRS is set at 2.3%, FERS at 2.0%. Should show up in your January checks.

Gordon

[abercrombie]

from theysaid:

Gordon,

Thanks for the good information on the Pension Protection Act changes. You are obviously very knowledgeable and your postings are appreciated.

airtac

[abercrombie]

From theysaid:


A couple of months ago I posted a heads up that retired firefighters can now exclude from their taxable income the amount of their health insurance premiums. At the time I posted it, the IRS had not yet said exactly how to do it.

The instructions can be found in IRS Publication 575, Pension and Annuity Income, on pages 5 and 6. under the header "Insurance Premiums for Retired Public Safety Officers". If you do this, the premiums cannot be used as an itemized deduction, but most people will be better off with the exclusion.

The IRS publication can be downloaded here:

www.irs.gov/pub/irs-pdf/p575.pdf

Gordon