You can withdraw from a TSP penalty-free starting at age 59½, and certain separated federal employees can go earlier: age 55 for most workers who leave in or after the year they turn 55, and age 50 (or after 25 years of service) for qualified public safety employees. On the other end, the law forces withdrawals to begin at 73 or 75 depending on your birth year. Losing the 10% early withdrawal penalty is not the same as owing no tax, so the age that matters for your situation depends on whether you are still working, already separated, or approaching the required distribution years.
Age 59½ Is the Standard Threshold
Once you reach 59½, the 10% additional tax on early distributions no longer applies. The rule comes from 26 U.S.C. § 72(t), which imposes the 10% penalty on retirement plan withdrawals taken before that age and then carves out an explicit exception once you hit 59½.1Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts It applies whether you are still working for the federal government or already separated.
The penalty disappearing does not make the money tax-free. Any amount you pull from a traditional TSP balance counts as ordinary income for the year you receive it, and the TSP withholds 20% of the taxable portion for federal income tax on lump-sum and partial distributions.2Thrift Savings Plan. Tax Rules About TSP Payments Your actual bill at filing time may run higher or lower than that 20% depending on your total income for the year. The TSP does not withhold state or local income tax, but it reports all payments to your state of residence.
Roth TSP money follows a different path. Contributions come out tax-free at any age. Earnings on Roth contributions are tax-free only if the distribution is qualified, which means five years have passed since January 1 of the year you first made a Roth TSP contribution and you are at least 59½.3Thrift Savings Plan. Traditional and Roth TSP Contributions If you started Roth contributions late in your career, you can be 59½ and still not meet the five-year clock, in which case the earnings portion is taxable.
Age 55 If You Separate From Federal Service
Leave federal service during or after the calendar year you turn 55 and you can take TSP distributions without the 10% penalty, even though you have not reached 59½. This is often called the Rule of 55.4Thrift Savings Plan. Information for TSP Participants Leaving Federal Employment
The timing detail matters. The separation has to happen in the year you turn 55 or later. Resign at 54 in December and turn 55 the following January and you do not qualify. And you have to actually separate; you cannot claim the exception while still on the payroll.
The other trap is rolling your balance out too soon. The age-55 rule applies only to money in the employer plan you separated from. Move your TSP into an IRA and try to withdraw before 59½ and the exception no longer protects you, because IRAs do not offer it. That is a common reason early retirees in their mid-50s keep funds in the TSP rather than rolling over immediately. If you are between 55 and 59½ and might need the cash, keep enough in the TSP to bridge that gap before moving the rest.
You report the exception on IRS Form 5329 using exception code 01, which covers distributions received after separation from service in or after the year you reached age 55.5Internal Revenue Service. Instructions for Form 5329
Age 50 for Qualified Public Safety Employees
Federal law enforcement officers, firefighters, air traffic controllers, customs and border protection officers, nuclear materials couriers, Capitol Police, Supreme Court Police, and certain other public safety employees have an earlier window. Under 26 U.S.C. § 72(t)(10), these qualified public safety employees can avoid the 10% penalty on distributions taken after separating from service at age 50 or after completing 25 years of service, whichever comes first.1Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts
The 25-years-of-service path is what lets some officers in their mid-40s reach TSP money penalty-free if they entered service young enough. The same Form 5329 exception code 01 covers this group.5Internal Revenue Service. Instructions for Form 5329 As with the age-55 rule, you have to actually leave federal service to claim it.
Withdrawing at 59½ While Still Working
You do not have to leave your job to reach TSP money once you are 59½. The TSP allows in-service withdrawals at that age from your full vested balance, including agency matching contributions, while you continue to work and contribute. You can take up to four of these per calendar year.6Thrift Savings Plan. In-Service Withdrawal Types and Terms The old 30-day waiting period between requests was eliminated in May 2024.7Thrift Savings Plan. No 30-Day Waiting Period Between Withdrawal Requests
You request withdrawals through the My Account portal on TSP.gov. The old paper forms, including TSP-95 and TSP-70, have been retired.8Thrift Savings Plan. Forms and Resources You can pick a single payment, scheduled installments, or a combination.
Hardship Withdrawals Do Not Get an Age Waiver
Employees under 59½ can take a financial hardship withdrawal for a qualifying emergency: negative monthly cash flow, unpaid medical expenses, casualty loss, legal costs from separation or divorce, or losses from a FEMA-declared major disaster.9Thrift Savings Plan. Financial Hardship The 10% early withdrawal penalty still applies. There is no age-based penalty exception for hardship withdrawals, and you cannot take another one for six months after the previous one. A hardship withdrawal solves a cash problem, not a tax problem.
Age 73 or 75: When You Have to Start Withdrawing
Eventually the law stops letting you defer. Required minimum distribution age depends on your birth year:
- Born 1951 through 1959: RMDs begin at age 73.
- Born 1960 or later: RMDs begin at age 75.
The SECURE 2.0 Act set these thresholds, and IRS final regulations confirmed that participants born in 1959 use age 73, resolving a drafting ambiguity in the original legislation.10U.S. Congress. Required Minimum Distribution (RMD) Rules for Original Owners
If you are still working for the federal government past your RMD age, the TSP does not require distributions while you remain actively employed. Once you separate, RMDs begin. The first distribution is due by December 31 of the year you separate, but the TSP lets you delay that first RMD until April 1 of the following year.11Thrift Savings Plan. Taking Money From Your Account
That April 1 delay creates a tax trap. Push the first RMD into the next calendar year and you will still owe the second RMD by December 31 of that same year. Two taxable distributions in one year can lift you into a higher bracket, so many participants take the first RMD in its actual distribution year to avoid the doubling.
Miss an RMD and the penalty is a 25% excise tax on the amount you should have withdrawn. If you correct the shortfall within two years, the penalty drops to 10%.12Internal Revenue Service. Retirement Topics – Required Minimum Distributions (RMDs)
One RMD detail catches people who own several retirement accounts: the TSP’s required distribution has to come from the TSP. You cannot cover it by taking a larger withdrawal from an IRA. Unlike traditional IRAs, where you can aggregate the calculation and pull the whole amount from one account, employer plans like the TSP must be satisfied on their own.