You can withdraw money from your TSP at four points: after you turn 59½ while still employed, during a documented financial hardship, any time after you separate from federal service, and once required minimum distributions begin at age 73. Each path has its own rules for how much you can take, how it’s taxed, and whether the 10% early withdrawal penalty applies. Knowing which door you’re walking through matters, because using the wrong one can add thousands of dollars in avoidable tax.
Withdrawing While You’re Still Working
Active federal employees and service members have two ways to access their TSP: an age-based withdrawal at 59½, or a financial hardship withdrawal at any age.
Age 59½ In-Service Withdrawals
Once you reach 59½, you can take money out of your TSP while still on the job, with no cap on the number of requests you make.1The Thrift Savings Plan (TSP). In-Service Withdrawal Types and Terms Each request must be at least $1,000, or your full vested balance if it’s less. The 10% early withdrawal penalty is off the table at this age, but the TSP still withholds 20% of the taxable portion for federal income tax unless you direct the money into an IRA or another eligible employer plan as a rollover.2Thrift Savings Plan. Withdrawals In-Service
That 20% is a prepayment, not your final bill. Your actual tax rate depends on your total income for the year, and any overpayment comes back as a refund.
Financial Hardship Withdrawals
If you’re under 59½ and still working, you can only withdraw for one of five recognized financial hardships:3eCFR. Part 1650 – Methods of Withdrawing Funds From the Thrift Savings Plan
- Negative monthly cash flow, where your recurring expenses exceed your income.
- Unreimbursed medical expenses for you, your spouse, or a dependent.
- Personal casualty loss from a sudden event like fire, storm, or theft, not covered by insurance.
- Legal fees and court costs from a separation or divorce (child support and alimony don’t count).
- Losses or lost income from a FEMA-declared disaster affecting your home or workplace.
The minimum request is $1,000, and the amount can’t exceed the actual financial need you can document.2Thrift Savings Plan. Withdrawals In-Service Because you’re under 59½, the 10% early withdrawal penalty applies to the taxable portion on top of income tax.4Thrift Savings Plan (TSP). Worksheet to Determine Financial Hardship As of May 2024, there’s no longer a 30-day waiting period between requests; you can submit another hardship withdrawal as soon as you have a new qualifying need.5The Thrift Savings Plan (TSP). No 30-Day Waiting Period Between Withdrawal Requests
Withdrawing Before 59½ Without the 10% Penalty
Federal employees have an escape valve that most private-sector workers don’t. If you separate from federal service during or after the calendar year you turn 55, you can take TSP distributions without paying the 10% early withdrawal penalty.6Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions Regular income tax still applies to traditional dollars, but the extra 10% goes away.
Public safety employees get an even earlier threshold. Federal law enforcement officers, customs and border protection officers, federal firefighters, air traffic controllers, and corrections officers who separate during or after the year they turn 50 qualify for the same penalty exemption. Public safety employees with at least 25 years of service qualify at any age.7The Thrift Savings Plan (TSP). SECURE Act 2.0, Section 329 – Modification of Eligible Age for Exemption From Early Withdrawal Penalty for Qualified Public Safety Employees
One warning if you’re planning to retire between 55 and 59½: this age-based exception belongs to the TSP, not to IRAs. Roll your balance into an IRA and the exception is gone. Withdrawals from that IRA before 59½ will trigger the 10% penalty even though the same money would have come out penalty-free from the TSP.
Withdrawal Options After You Leave Federal Service
Once your former agency reports your separation to the TSP, the in-service restrictions fall away and you gain access to four withdrawal methods. You can use one, or mix and match.8The Thrift Savings Plan (TSP). Withdrawals in Retirement
- Partial distribution of a specific dollar amount (minimum $1,000), leaving the rest of your balance invested.
- Total distribution that empties your account and closes it to future contributions or transfers in.
- Installment payments made monthly, quarterly, or annually, either at a fixed dollar amount (minimum $25 per payment) or calculated by the TSP using IRS life expectancy tables. You can change or stop these at any time.
- A life annuity purchased through the TSP’s annuity provider using at least $3,500 of your balance. Once bought, this is permanent, and the money is gone in exchange for guaranteed monthly payments for life.
Nothing forces a single choice. You might pull a partial distribution to handle an expense, set up quarterly installments to supplement your pension, and leave the balance invested. There’s no waiting period between partial distribution requests.5The Thrift Savings Plan (TSP). No 30-Day Waiting Period Between Withdrawal Requests
Your account won’t open for post-separation withdrawals until the agency actually submits your separation notice. If you’ve retired but can’t access the withdrawal options online, check with your former HR office.
How Your Withdrawal Gets Taxed
Traditional TSP dollars were contributed pre-tax, so every dollar you withdraw counts as taxable income the year you receive it. Roth TSP dollars were contributed after tax, so your contributions come back to you tax-free.9The Thrift Savings Plan (TSP). Traditional and Roth TSP Contributions
The earnings on Roth contributions have their own test. Those earnings are only tax-free if two conditions are both satisfied: at least five years have passed since January 1 of the year you made your first Roth TSP contribution, and you’re at least 59½, permanently disabled, or deceased.9The Thrift Savings Plan (TSP). Traditional and Roth TSP Contributions Take Roth earnings before both are met and those earnings are taxed as income.
The TSP automatically withholds 20% of any traditional distribution paid directly to you, and you cannot request a lower rate.10Thrift Savings Plan (TSP). Changes to Tax Rules About TSP Payments The way to avoid withholding is a direct rollover into an IRA or another eligible employer plan, which defers tax entirely until you eventually pull the money out of the receiving account.
Required Minimum Distributions at Age 73
The choice of when to withdraw becomes mandatory once you hit age 73. Federal law requires you to begin taking annual distributions from your traditional TSP balance that year. SECURE 2.0 raised the starting age from 72 to 73 for anyone who turned 72 after December 31, 2022, and will raise it to 75 for those who turn 74 after December 31, 2032.11Office of the Law Revision Counsel. 26 USC 401 – Qualified Pension, Profit-Sharing, and Stock Bonus Plans If you’re still working for the federal government when you reach the applicable age, your first required distribution can be delayed until April 1 of the year after you actually retire.
The amount is calculated from your account balance and IRS life expectancy tables. If you don’t submit a withdrawal request by the deadline, the TSP processes the distribution automatically for separated participants.
Skipping an RMD is expensive. The IRS charges a 25% excise tax on any amount you should have withdrawn but didn’t.12Office of the Law Revision Counsel. 26 USC 4974 – Excise Tax on Certain Accumulations in Qualified Retirement Plans That penalty drops to 10% if you correct the shortfall within two years and file Form 5329 with your return.13Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
Roth balances got a major change in 2024. Under Section 325 of SECURE 2.0, Roth balances in employer plans like the TSP are no longer subject to required minimum distributions during the participant’s lifetime.14Federal Register. Elimination of Mandatory Roth Distributions Your Roth TSP can keep growing tax-free past 73. Only your traditional balance triggers the mandatory withdrawal.
Two Things That Can Complicate a Withdrawal
Outstanding TSP Loans
If you separate with an unpaid TSP loan, the TSP will send you a notice giving you a choice: repay the balance in full or begin making post-separation payments by check or direct debit. Miss the deadline in that notice and the unpaid principal plus accrued interest is declared a loan offset and reported to the IRS as taxable income for the year.15eCFR. Part 1655 – Loan Program If you’re under 59½ and don’t qualify for the age-55 exception, the 10% early withdrawal penalty tacks on. Once foreclosed, the loan can’t be repaid.16Thrift Savings Plan (TSP). TSP Booklet 04 – Loans
Spousal Consent
If you’re married, your spouse has federally protected rights over your account. A married participant can only take a withdrawal or change a withdrawal election if the spouse waives the right to a survivor annuity in writing.17Office of the Law Revision Counsel. 5 USC 8435 – Protections for Spouses and Former Spouses For in-service withdrawals, the spouse must separately consent to the withdrawal itself in writing. The TSP requires that consent signature to be notarized, for both in-service and post-separation withdrawals.18Federal Register. Temporary Waiver of Notarization Requirement for Spousal Consent Exceptions are available only if you can show your spouse’s whereabouts are unknown or that exceptional circumstances apply.
How to Submit Your Request
All TSP withdrawal requests now go through the “My Account” portal at tsp.gov. The older paper forms, including TSP-75 and TSP-76, are obsolete.19The Thrift Savings Plan (TSP). Attention – Obsolete Forms You log in, select your withdrawal type, enter the amount, and set your tax withholding and direct deposit preferences. Electronic signatures replace ink for most of the process.
The one paper step that remains is spousal consent. Print the consent section, have your spouse sign in front of a notary, and submit the notarized form. Notary appointments and mailing add real time, so plan around that step. Requests submitted before noon Eastern time are processed the same business night; anything later goes through the next business day.8The Thrift Savings Plan (TSP). Withdrawals in Retirement You can cancel or modify a pending request up to noon on the day it’s scheduled, so review the numbers carefully before submitting.