Q & A Session – Proposed Removal and Effects on TSP, Retirement

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Ask the Lawyer received the following question (paraphrased for easier reading and clarity) from a reader on a legal matter that might be of interest to the entire audience.

Q:

I have a friend who may be fired from federal service. She has a total of 26 years of service and is 56 years old. If she receives a proposed removal, should she resign immediately? Also, will she lose her retirement eligibility and what happens to her TSP account?

A:

This person could resign immediately, but if she is FERS, she would have to take a reduced annuity. If she is CSRS, she has to wait until age 62 for a deferred annuity. The TSP account is not affected, but early withdrawals from a TSP (prior to age 59 ½) are made with a 10% penalty.

Bill Bransford is managing partner of Shaw, Bransford & Roth, PC.

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