Hello, I am hoping that someone knows the answer to this question, as I have looked all over GOOGLE and have confused myself. Here is my question:
(Retired status, if that matters – no longer contributing to the TSP.)
As I understand it, one can withdraw CONTRIBUTIONS made to a Roth IRA at any time, for any reason, without penalty prior to 59 1/2. Only when you want to withdraw the EARNINGS, do you pay the penalty. However, this does not seem to be the case with the TSP Roth….but I don't understand why.
Can anyone shed light on this? Thank you!
Early TSP ROTH Withdrawal of Contributions?
byu/ILoveInNOut76 inMilitaryFinance
Posted by ILoveInNOut76
4 Comments
You sure can, you’ll have to pay tax on it up front. TSP literally has a page to do it from too. I had to take a little out while I was between jobs and needed home repairs. Super simple, all online.
Because that’s how the law is written.
You’ll pay a penalty for early withdrawal. Why? Because law, that’s why.
Employer sponsored plans (401k, TSP, etc) are treated differently than IRAs in this case. I don’t know if that was done on purpose by Congress or if it’s just the way the law ended up written.
You can transfer your Roth TSP to a Roth IRA and then withdraw only your contributions. Or you can take a withdrawal from your Roth TSP and then do a indirect rollover of just the taxable amount to a Roth IRA.