Federal law enforcement officers and firefighters will soon be able to withdraw funds from their Thrift Savings Plan (TSP) after the age of 50 without a tax penalty.
The legislation cutting the penalty was passed unanimously by the Senate June 4. The House passed a similar version of the legislation last month, but must now take up the Senate’s amended version of the bill.
Under current law, federal law enforcement officers are eligible to retire after 20 years of service at age 50 and must retire in many cases by age 57. Usually the earliest possible withdrawal date without penalty is 59.5 years old. That means many federal employees must wait a decade to withdraw money to use for retirement or face a 10% tax penalty.
Jon Adler, president of the Federal Law Enforcement Officers Association, said ” federal public safety officers should be able to access their Thrift Savings Plan at age 50 without the harsh IRS 10 percent penalty.”
Sen. Pat Toomey, R-Pa., who sponsored the legislation, said the legislation eliminates the excessive tax on law enforcement officers and helps them retire earlier without unneeded penalties.
“Because our federal law enforcement officers put their lives on the line for us, often in hazardous duty, they may retire at age 50 after completing 20 years of service,” Toomey said “However, current withdrawal penalty rules can place them in years of unnecessary limbo.”