Pension Protection Act 2006

Early Withdrawl Penalty

The law provides both future and retroactive relief from the early withdrawal penalty for Reservists who may take (or have taken) a withdrawal from their TSP accounts when called to active duty. To be eligible, the Reservist must be called up for more than 179 days (or an indefinite period) between September 11, 2001, and December 31, 2007, and the withdrawal taken between the beginning date of the order or call and the close of the active duty period. Also, for up to two years from the day after your tour of active duty ends (or August 17, 2008 whichever is later), the Reservist may “repay” the money withdrawn back into retirement savings by investing it in an individual retirement account.

If you believe you are eligible, you should check with your legal assistance officer, tax advisor, or the IRS about this new benefit. Click here for a link to the IRS guidance on this benefit. You can find additonal information in IRS Publication 575, Pension and Annuity Income (2006) on, Qualified Reservist Distributions (p.30).