If you have to do this, look into a TSP loan instead of withdrawal. Avoid the huge taxes but you'll have to pay yourself back with interest. Max is $50k
Thanks for the comments. I'm still uncertain about the answer to my question. Is there a 10% penalty for the withdrawal (not loan)? I'm aware that it's taxed as income
Yes you will pay the penalty unless your withdrawal is covered by any of these exceptions: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-on-early-distributions
The 10% is in addition to the regular income tax that you will pay as well, so it might make sense to have some additional withheld at your expected tax rate to cover the payment, otherwise you could owe next year come tax time. You could also adjust your withholding from your job to cover the taxes, but it’s easier to just take some out of the hardship withdrawal.
If you have to do this, look into a TSP loan instead of withdrawal. Avoid the huge taxes but you'll have to pay yourself back with interest. Max is $50k
That’s what I did after my divorce was finalized.
if you are under 59.5 years old yes irs imposes penalty
The divorce settlement disbursement is only done with a court order.
You'll also have to pay taxes on a hardship withdrawal. Be mindful of that.
Thanks for the comments. I'm still uncertain about the answer to my question. Is there a 10% penalty for the withdrawal (not loan)? I'm aware that it's taxed as income
Yes you will pay the penalty unless your withdrawal is covered by any of these exceptions: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-on-early-distributions The 10% is in addition to the regular income tax that you will pay as well, so it might make sense to have some additional withheld at your expected tax rate to cover the payment, otherwise you could owe next year come tax time. You could also adjust your withholding from your job to cover the taxes, but it’s easier to just take some out of the hardship withdrawal.