TSP Withdrawal After Separation: Distributions, Installments, and Taxes

After you leave federal service, a TSP withdrawal after separation can take one of two everyday forms: a partial distribution of at least $1,000, or recurring installment payments paid monthly, quarterly, or annually.¹ You can also take the whole balance at once or buy a life annuity. The TSP Modernization Act of 2017 removed the old one-withdrawal limit, and a 2024 change eliminated the 30-day waiting period between requests.² What still trips people up is not the request itself but the tax withholding, spousal rules, and early withdrawal penalty sitting behind it.

When Your Account Actually Unlocks

You cannot request a post-separation withdrawal until your former agency or service branch transmits an electronic separation notice to the TSP record keeper. Until that data arrives, the account still shows active-employee status and only in-service withdrawal options are available. Some agencies send the notice within days of your last day; others take several weeks.

Check the “My Account” portal after separation and watch for the status to change to “Separated.” Once it does, partial distributions, installment payments, total distributions, and annuity purchases all open up.¹ If several weeks go by without a status change, the delay is almost always at your former agency’s HR office, not the TSP.

Partial Distributions

A partial distribution pulls a specific dollar amount and leaves the rest invested. The minimum is $1,000, and there is no cap on how many you can take.¹² You can take a partial distribution even while you’re already receiving installments.

When you submit the request you pick the source (traditional balance, Roth balance, or both proportionally) and whether the money goes to your bank account or rolls over to an IRA or another eligible plan. That source choice drives the tax treatment described further down.

Installment Payments

Installments create a recurring income stream. You choose the frequency (monthly, quarterly, or annually) and one of two calculation methods.³

Fixed dollar amount, at least $25 per installment, staying the same until you change it.
Life expectancy, where the TSP calculates the payment each year using IRS life expectancy tables, your age, and your prior year-end balance. It adjusts every January.

You can stop or change installments at any time, but many changes require stopping the current series and starting a new one: changing the dollar amount, the frequency, the source, or switching from fixed to life-expectancy-based payments. A narrow set of changes can be handled without stopping, but only by calling the ThriftLine: starting or changing direct deposit to a single bank account, adjusting federal tax withholding percentage, and starting or stopping rollovers of traditional installments to an IRA.¹ Installments process on the fifteenth of the month due, or the next business day; changes made after noon Eastern that day do not stop the payment already in motion.

How Taxes Are Withheld

Withholding depends on the type of distribution and whether the money is coming out of your traditional or Roth balance.

Traditional Balance

Partial distributions, total distributions, and fixed-dollar installments expected to last fewer than ten years are eligible rollover distributions. The TSP must withhold 20% for federal income tax on any portion paid to you rather than rolled over, and you cannot opt out of that withholding on a direct payment.⁴

Installments expected to last ten years or more, and all life-expectancy-based installments, are treated as periodic payments. The TSP withholds as if you were a single filer with zero adjustments unless you submit a different withholding election.⁵

Roth Balance

Your own Roth contributions come back tax-free because you paid tax on them going in. Earnings on those contributions are tax-free too if the withdrawal is qualified, meaning at least five years have passed since January 1 of the year you made your first Roth TSP contribution and you are at least 59½, permanently disabled, or deceased.⁶

If the Roth withdrawal is not qualified, the earnings portion is taxed as ordinary income and the TSP withholds 20% on the earnings for a direct payment. A direct rollover to a Roth IRA avoids withholding.⁵ One detail catches people out: agency and service matching contributions land in your traditional balance regardless of how you designated your own contributions, so participants who contributed only to Roth still have a traditional balance to deal with.⁶

The 10% Early Withdrawal Penalty

If you pull from your traditional balance, or take non-qualified Roth earnings, before age 59½, the IRS adds a 10% penalty on top of regular income tax.⁷ Several exceptions can save you from it:

Separation from federal service during or after the calendar year you turn 55 (the “Rule of 55”).⁷
Federal law enforcement officers, firefighters, customs and border protection officers, and air traffic controllers who separate during or after the year they turn 50, or who have at least 25 years of qualifying service.⁸
Substantially equal periodic payments calculated to last for your life expectancy or the joint life expectancy of you and your beneficiary, paid at least annually.⁷
Distributions due to permanent disability, payments to a beneficiary after the participant’s death, and distributions under a qualified domestic relations order.⁷

The Rule of 55 only works if you leave the money in the TSP. Roll into an IRA and then draw before 59½, and the age-55 exception no longer applies; that exception is specific to employer plans.⁹

Spousal Consent and Notification

A married participant cannot quietly withdraw around a spouse’s rights, and the rules differ by retirement system.

FERS and Uniformed Services

Your spouse must provide written consent and waive the right to a joint and survivor annuity before you can take a partial distribution, elect a total distribution other than the default annuity, or change the amount or frequency of installment payments.¹⁰ The rule applies even if you and your spouse are legally separated but not divorced.¹¹ Once the TSP receives the signed consent, that waiver is irrevocable for that transaction. Stopping installments, notably, does not require spousal consent; only starting or changing them does.

CSRS

Your spouse does not need to consent but is entitled to notice that you applied for a post-employment distribution or changed installment payments. You must give the TSP your spouse’s current email or mailing address. For total distributions the notification requirement applies only when your vested balance exceeds $3,500; for partial distributions it applies regardless of balance.¹²

Notarization

Any TSP form requiring a spousal signature must be notarized. The TSP accepts traditional in-person notarization along with electronic and remote notarization.¹³ Notary fees typically run between $2 and $25 per signature depending on the state. If you cannot locate your spouse, you can apply for an exception by submitting a court order, a government agency determination, or signed statements documenting good-faith search efforts within the preceding 90 days.¹²

Handle an Outstanding TSP Loan First

Leaving federal service with an unpaid TSP loan starts a countdown. The record keeper will send a notice explaining your options and the deadline to either repay the balance in full or arrange post-separation loan repayments. Miss the deadline and the outstanding balance plus accrued interest is declared a “loan offset” and reported to the IRS as taxable income for the year.¹⁴¹⁵

A loan offset cannot be rolled over to an IRA to avoid the tax hit.¹⁶ If you are under 59½ and do not qualify for the age-55 separation exception, the 10% early withdrawal penalty applies to the taxable amount on top of ordinary income tax. It is one of the most expensive mistakes separated participants make.

Rolling a Distribution Into an IRA or Another Plan

Most distributions to a separated participant are eligible rollover distributions and can move tax-free into a traditional IRA, a Roth IRA, or another employer’s retirement plan. Partial distributions, total distributions, and fixed-dollar installments expected to last fewer than ten years all qualify.¹⁶

Roth TSP money can only roll into a Roth IRA or another plan’s Roth account.¹⁶
Tax-exempt combat zone contributions will be paid directly to you if the receiving institution does not accept tax-exempt balances.¹⁶
A direct rollover avoids withholding. If the money is paid to you first, the 20% mandatory withholding applies, and you have 60 days to redeposit the full amount, making up the withheld 20% from other funds.
Life-expectancy installments are not eligible for rollover, because the IRS treats them as periodic payments.

Submitting the Request and Getting Paid

Log in at tsp.gov and open the “Withdrawals and Changes” area from the account overview. The tool walks you through the distribution type, amount, source, banking details, and rollover choice. Have your bank’s nine-digit routing number and account number ready, and the receiving institution’s name and mailing address if you’re rolling over.

The system generates a summary showing the projected gross distribution and the estimated net after withholding before you electronically sign and submit. Once share liquidation starts, the request generally cannot be reversed. Requests submitted before noon Eastern time process that same business night; requests after noon process the next business night.¹

Electronic funds transfer to a bank account is the fastest delivery method, typically arriving within a few business days after disbursement. Paper checks take seven to ten business days. The Activity tab shows real-time status, and the secure message center records the date and amount of the payment for use in a trace if delivery fails. Keeping the mailing address and banking information current prevents most delivery problems.

Required Minimum Distributions

Once you have separated and reached a certain age, the IRS requires you to start taking money from your traditional TSP balance. The age depends on when you were born:¹⁷

Born before 1960: RMDs begin at age 73.
Born in 1960 or later: RMDs begin at age 75.

Your first required distribution must be taken by April 1 of the year after you both reach the applicable age and have separated from service.¹⁷ If you are still working past that age, RMDs do not begin until you leave. Missing an RMD triggers a steep IRS penalty, so set up installments or calendar reminders well in advance if you are approaching those ages.

1
Thrift Savings Plan. Withdrawals in Retirement
2
Thrift Savings Plan. No 30-Day Waiting Period Between Withdrawal Requests
3
Thrift Savings Plan. Installments, Total and Partial Distributions, Life Annuities
4
Internal Revenue Service. Pensions and Annuity Withholding
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Thrift Savings Plan. Tax Rules About TSP Payments
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Thrift Savings Plan. Traditional and Roth TSP Contributions
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Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts
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Thrift Savings Plan. SECURE Act 2.0, Section 329 – Modification of Eligible Age for Exemption From Early Withdrawal Penalty for Qualified Public Safety Employees
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Thrift Savings Plan. Information for TSP Participants Leaving Federal Employment
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eCFR. 5 CFR 1650.61 – Spousal Rights Applicable to Post-Employment Distributions
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Thrift Savings Plan. Marriage and Spouse’s Rights
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eCFR. 5 CFR Part 1650 Subpart G – Spousal Rights
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Thrift Savings Plan. Notarization Requirements Reinstated as of October 1, 2020
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eCFR. 5 CFR 1655.15 – Deemed Distributions and Loan Offsets
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eCFR. 5 CFR Part 1655 – Loan Program
16
Thrift Savings Plan. Rollovers From the Thrift Savings Plan to Eligible Retirement Plans
17
Thrift Savings Plan. Taking Money From Your Account