When Can You Withdraw From Your TSP Account?

You can withdraw from your TSP account at three main points: after you turn 59½ while still working for the federal government, at any age once you separate from federal service or the uniformed services, or during a qualifying financial hardship. Each path has its own rules on how much you can take, what the TSP withholds, and whether the 10% early withdrawal penalty applies. Picking the wrong one can cost thousands in taxes you didn’t have to pay.

Age 59½ Withdrawals While Still Working

Once you reach 59½, you can take money from your TSP without leaving your federal job. You can withdraw all or part of your vested balance as a single payment, with partial withdrawals subject to a $1,000 minimum. You’re capped at four of these age-based withdrawals per calendar year.¹ As of May 2024, there’s no longer a 30-day waiting period between requests, so back-to-back submissions are allowed.²

Anything you don’t roll directly into a traditional IRA or another eligible plan is taxable income for the year you receive it, and the TSP withholds 20% for federal income tax on eligible rollover distributions that aren’t directly transferred.³ Because you’re past 59½, the 10% early withdrawal penalty doesn’t apply.

After You Separate From Federal Service

Leaving federal service opens the full menu of withdrawal options at any age. Your agency has to report your separation to the TSP record keeper first, and until that reporting posts, no post-employment distribution will process.⁴ Most agencies transmit that data within a few weeks of your last pay period, but delays happen.

After separation, you can use any combination of four payout methods:⁵

A partial distribution of a specific dollar amount, with a $1,000 minimum, leaving the rest invested.
A total distribution that cashes out the entire balance. Once processed, your account drops to $0 and you can no longer roll money into the TSP.
Installment payments on a regular schedule, either a fixed dollar amount (minimum $25) or an amount calculated based on life expectancy.
A life annuity, converting some or all of your balance into guaranteed monthly payments for life through the TSP’s annuity provider.

You can mix these. A partial lump sum for an immediate need with the balance moved to installments is a common pairing. Withdrawals can’t be reversed once processed.

The Age 55 (or 50) Rule That Changes the Math

If you separate from federal service during or after the calendar year you turn 55, the 10% early withdrawal penalty does not apply to your TSP distributions.³ This is one of the biggest structural advantages the TSP has over a traditional IRA, where the penalty runs until 59½. For federal law enforcement officers, firefighters, customs and border protection officers, and air traffic controllers, the trigger age drops to 50.⁶ The date you separate is what matters, so leaving late in a qualifying year is fine; leaving early in the year before is not.

Financial Hardship Withdrawals

If you’re still working and haven’t reached 59½, a financial hardship withdrawal is the main way to reach your TSP early. The trade-offs are real. You can only withdraw your own contributions and their earnings, not agency matching or automatic contributions.⁷ The minimum request is $1,000, and you must certify a genuine financial need in one of five categories.⁸

The five qualifying situations are:

Negative monthly cash flow, where your recurring expenses exceed your income on an ongoing basis.
Unreimbursed medical expenses for you, your spouse, or dependents, including medically necessary home modifications.
Personal casualty loss to repair or replace property damaged by a sudden, unexpected event like a fire, flood, or theft.
Legal costs from separation or divorce, including attorney fees and court costs, but not child support or court-ordered payments to a spouse.
Losses from a FEMA-declared disaster, provided your home or workplace was in the designated assistance area.

The amount you request can’t exceed your documented need, and you’ll need to produce supporting documentation if audited. The old six-month contribution lockout after a hardship withdrawal was repealed in 2018, so you can keep contributing and receiving agency matching right away.⁹

The tax hit is steep. The TSP withholds 10% for federal income tax, and if you’re under 59½ you’ll generally owe the additional 10% early withdrawal penalty on top of ordinary income tax.³ Hardship withdrawals can’t be rolled over, so there’s no way to defer those taxes.

When the IRS Forces the Issue

Eventually the IRS requires you to start pulling money out of your traditional TSP balance. If you were born between 1951 and 1958, required minimum distributions begin at age 73. If you were born in 1960 or later, they begin at 75.¹⁰

If you’re still working for the federal government past your RMD age, you can defer distributions until the year you separate. Your required beginning date is April 1 of the year following the later of reaching the applicable age or retiring.¹⁰

Roth TSP balances are exempt from RMDs entirely under SECURE 2.0. Only your traditional balance is used in the calculation, and only traditional distributions count toward satisfying the requirement.¹¹ Missing an RMD is expensive: the IRS charges an excise tax of 25% on the amount you should have withdrawn, dropping to 10% if you correct the mistake within two years.¹²

What You Actually Keep: Taxes and the 10% Penalty

How much of a withdrawal reaches your bank account depends on whether the money is traditional or Roth and how old you are when you take it.

Traditional vs. Roth Balances

Traditional TSP withdrawals are taxed as ordinary income in the year received, covering both contributions and earnings. Roth TSP contributions come out tax-free because you already paid tax on them. Earnings on your Roth balance are also tax-free, but only in a “qualified” withdrawal: five years must have passed since January 1 of the year of your first Roth TSP contribution, and you must be at least 59½, permanently disabled, or deceased.¹³ When you request a withdrawal you can specify traditional, Roth, or a proportional mix.

The 10% Early Withdrawal Penalty and Its Exceptions

If you take money from your TSP before age 59½ and it isn’t rolled over, the taxable portion is generally hit with a 10% penalty on top of income tax.¹⁴ On a $20,000 traditional withdrawal, that’s $2,000 in penalty alone before regular taxes.

Several exceptions eliminate the penalty for TSP participants:³

Separation from federal service during or after the year you turn 55 (age 50 for qualifying public safety employees).
Total and permanent disability.
A series of substantially equal periodic payments based on your life expectancy, provided you maintain the schedule.
Up to $5,000 within one year of a birth or qualified adoption.
Up to $1,000 per calendar year for emergency personal expenses.
Up to $10,000, or 50% of your vested balance if less, within one year of domestic abuse.
Distributions to a terminally ill participant.
Distributions related to a federally declared disaster.
Court-ordered payments under a qualified domestic relations order.

The penalty never applies to Roth contributions themselves (you already paid tax on them) or to tax-exempt contributions from combat zone pay.

Withholding Rates

The TSP doesn’t wait for tax filing to collect. For eligible rollover distributions that aren’t directly transferred, mandatory federal withholding is 20%. For hardship withdrawals and required minimum distributions, the default rate is 10%.³ These are prepayments on your actual bill, not the final amount owed.

If You’re Married, Your Spouse Has to Sign

If you’re married and covered under FERS or the uniformed services retirement system, spousal rights apply to your withdrawals. For a full post-separation withdrawal, your spouse is entitled to a joint-life annuity with a 50% survivor benefit unless they waive that right with a notarized signature. Partial withdrawals require notarized written consent regardless of the amount.¹⁵

The TSP may waive the signature if you can show that your spouse’s whereabouts can’t be determined, or if exceptional circumstances make requiring the signature inappropriate.¹⁵ “Exceptional circumstances” is read strictly. Examples include a court order documenting that you and your spouse have lived separately with no financial ties for three or more years, or that your spouse abandoned you but you’ve chosen not to divorce for religious reasons. Without a court order or agency determination, the exception is unlikely to be granted. Incomplete spousal paperwork is one of the most common reasons withdrawal requests stall.

Consider a Loan Before You Withdraw

If your need is temporary, a TSP loan often beats a withdrawal. You borrow from your own account, repay yourself with interest, and your balance stays largely intact. Two loan types are available:¹⁶

A general purpose loan for any reason, repayment term of 1 to 5 years, $50 processing fee.
A primary residence loan for buying or building a primary home, repayment term of 5 to 15 years, $100 processing fee, with documentation required.

The minimum loan is $1,000. The maximum is the smallest of your own contributions and their earnings, 50% of your vested balance (or $10,000 if greater) minus any outstanding loan balance, or $50,000 minus your highest outstanding balance over the past 12 months.¹⁶ The interest rate equals the G Fund rate from the month before you apply and stays fixed. Repayments come out of your paycheck, so you have to be in active pay status to qualify.

One warning: if you separate with an outstanding loan balance, the unpaid amount is treated as a taxable distribution and can trigger the 10% penalty if you’re under 59½ and don’t otherwise qualify for an exception.

1
eCFR. 5 CFR 1650.31 – Age-Based Withdrawals
2
The Thrift Savings Plan (TSP). New Rules and Processes for Age-Based In-Service Withdrawals
3
Thrift Savings Plan. Changes to Tax Rules about TSP Payments
4
eCFR. 5 CFR Part 1650 – Methods of Withdrawing Funds from the Thrift Savings Plan
5
The Thrift Savings Plan (TSP). Withdrawals in Retirement
6
The Thrift Savings Plan (TSP). Public Safety Employees Exemption to the Early Withdrawal Penalty
7
Thrift Savings Plan. Withdrawals In-Service
8
eCFR. 5 CFR 1650.32 – Financial Hardship Withdrawals
9
Internal Revenue Service. Retirement Topics – Hardship Distributions
10
Internal Revenue Service. Required Minimum Distributions
11
The Thrift Savings Plan (TSP). SECURE 2.0 and the TSP
12
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
13
The Thrift Savings Plan (TSP). Traditional and Roth TSP Contributions
14
Office of the Law Revision Counsel. 26 USC 72 – Annuities; Certain Proceeds of Endowment and Life Insurance Contracts
15
eCFR. Subpart G – Spousal Rights
16
The Thrift Savings Plan (TSP). TSP Loans