Federal tax on TSP and annual leave


Q. Are federal taxes taken out of the lump-sum payment for annual leave? And If I withdraw all of my Thrift Savings Plan upon retirement, will the tax be taken out before I receive the payment?

A. Reg: Yes, federal taxes will be taken out of your lump-sum payment for unused annual leave.

Mike: A lump-sum distribution from your TSP will be subject to 20 percent minimum federal tax withholding.


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Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your retirement-related questions to fedexperts@federaltimes.com.

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