This is actually a maybe/maybe not situation for the TSP....for a TSP distribution to be eligible for exemption under Bailey, you had to be making contributions to the TSP before 12 Aug of 1989, and even then, it is possible that not all of the distribution is Bailey eligible. See the discussion in section 4 on pages 42 and 43 of the following NC tax bulletin for details to see if it affects you:
https://files.nc.gov/ncdor/documents/files/2019-Personal-Taxes-Bulletin.pdf
".....it is possible for a participant in the Federal Thrift Savings Plan to be vested as of August 12, 1989, in some components of the plan while at the same time not being vested in other components. "
____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*
