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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 7195
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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I have had short-term as well as term capital losses - most

Customer Question

Hi; I have had short-term as well as long term capital losses - most incurred by day-trading. If I withdraw money from my Thrift savings plan (I am 58 and retired now and I can take a one-time withdrawal from my TSP) - the withdrawal would be taxed at 20%.Can I subtract the capital loss (either short or long-term or both??) against the withdrawal from the TSP so I do not have to pay the 20% tax?
I retired after age 55 so I should not pay the extra 10% penalty for early withdrawal, right?
Thanks a lot for your answer.
Submitted: 1 year ago.
Category: Tax
Expert:  Stephen G. replied 1 year ago.

No, you may not subtract those capital losses except to the extent of $3,000. per year. The excess of capital losses over any capital gains may be carried forward and used again ordinary income, such as withdrawals from your TSP in future tax years. So, you may want to defer withdrawals in excess of the $3,000. to next year (2016) to at least be able to tax advantage of an additional $3,000. of TSP withdrawals.

Expert:  Stephen G. replied 1 year ago.

Retirement Withdrawals

Since the TSP is a retirement plan, there is no penalty for withdrawing your money during retirement. If you stop working for the federal government, you can start making retirement withdrawals when you turn 55. If you keep working for the federal government, you need to wait until you turn 59-1/2. You will still owe income tax on your entire retirement withdrawal.

Expert:  Stephen G. replied 1 year ago.

Just checking in. Have you had a chance to see my response? If so, please remember to rate my response as that is the only way we receive credit for our work.

Steve G.