Withdrawals in retirement

You have several options for how to use the money in your TSP account after you retire or separate from federal service or the uniformed services. You can keep money in your TSP account as long as you want to. If you have other sources of income in retirement and don’t need money from your TSP account right now, you don’t need to request withdrawals (also called distributions or post-employment distributions when you take money out after you leave federal service) until you reach a certain age and become subject to required minimum distributions (RMDs).

• If you’re currently working for the federal government and want information about taking money from your TSP account, learn about in-service withdrawals or consider taking a TSP loan.

• If you’re a beneficiary participant, your withdrawal or distribution options may be different from those outlined here.

Staying with the TSP

You can keep your TSP account after you separate from federal service as long as you have a vested balance of $200 or more.

Many participants choose to keep their money in the TSP because of the TSP’s low-cost funds.

And you can always move money into your TSP account by making rollovers from eligible employer plans and from traditional IRAs.

You always control how your money in the TSP is invested, even if you aren’t making contributions.

How to request a withdrawal or distribution

To request a TSP withdrawal or distribution after you leave federal service, log in to My Account to begin the request or contact the ThriftLine.

Withdrawals and distributions cannot be reversed once they’ve been processed, so think carefully before you make a move. Before you request a withdrawal or distribution, make sure you understand your options, the effects on your TSP account, tax rules, and other details. These TSP booklets offer comprehensive information:

• Distributions (371kb)
• Tax Rules about TSP Payments (437kb)

• We process withdrawal and distribution requests each business day. Requests entered in our system before noon eastern time are processed that same night. Requests received after noon are processed the next business processing night. You may only cancel or change your request up until noon on the day your request is scheduled to be processed. Therefore, we recommend that you carefully consider your options before submitting a request.

Withdrawal options for post-employment distributions

You have four options for taking money from your TSP account as a separated participant:

• Partial distribution of a specified amount
• Total distribution
• Annuity purchase
• Installments (automatic withdrawals)

You can request a distribution using one of these methods or any combination of them that you choose.

Partial distribution

You can request a distribution of part of your TSP account. Partial distributions must be at least $1,000. You are allowed to take a partial distribution of your account even if you’re currently receiving installments.

Total distribution

You can request to receive a total distribution of your entire TSP account balance if you want to take all of your money out of the TSP. Once processed, your TSP account balance will be $0, and you’ll no longer be able to move money into the TSP from eligible plans. If you’re receiving installments when you request a total distribution, your installments will stop.

Annuity purchase

You can use all or part of your TSP account to purchase a life annuity through our outside vendor. Purchasing an annuity means that you pay now to receive monthly payments for the rest of your life (or, if you choose a joint life annuity, for the lives of you and your joint annuitant).

You no longer manage the money you use to purchase a life annuity. You give up your money and control of it in exchange for guaranteed lifetime monthly payments. An annuity purchase is not like your TSP account, an IRA, a CD, or a bank account. If you choose the annuity option, we will purchase an annuity for you from our annuity provider. Once purchased, your annuity is not part of your TSP account, and you cannot change or cancel the purchase.

Use the TSP Annuity Calculator to estimate how much monthly life annuity payments could be if you use part or all of your TSP account to purchase an annuity through our outside vendor.

• If you want to continue managing money in your TSP account and still receive monthly payments, you may prefer the installments option. Installments allow you to receive periodic payments from your account while retaining control of your savings, so you can make changes over time if you need to. However, installments continue only as long as you have a balance in your TSP account.

For more information, download our TSP fact sheet Annuities (83kb).

• Eligibility for annuity purchases

  The minimum for an annuity purchase is $3,500. The minimum applies to your traditional balance and your Roth balance separately.

• Annuity amount

  The amount of your monthly annuity payment is calculated using the dollar amount of your purchase, your age (and, if a joint annuity, the age of your joint annuitant), the type of annuity you choose, and the annuity interest rate index at the time you make the purchase. You won’t have to pay any commissions when you buy an annuity through the TSP.

Installments (automatic withdrawals)

You can choose to receive payments from your account monthly, quarterly (every three months), or annually.

• Installments are different from annuity purchases. With installments, you maintain control over your TSP savings and investment choices and can make changes over time if you need to. If you don’t want to manage your own savings and prefer the security of guaranteed lifetime monthly payments, you can instead choose to purchase an annuity.

• How to request installments

  To request installments, you need to log in to My Account and use the “Model Installments” option in the “Withdrawals and Distributions” section. You can use this tool to model potential installments without committing to them. When you’re satisfied with your selections, you can submit your request with this tool.

  There are two ways of setting the installment amount:

  • Fixed dollar amount—You choose the amount you want to receive in each installment as long as it’s at least $25.
  • Life expectancy—You have us compute your installments based on IRS life expectancy tables. Your initial installment amount will be based on your age and your account balance at the time of the first installment. We use your entire account balance even if you choose to take your distributions from your Roth balance first or your traditional balance first. Each January, we will recalculate the amount of your installment. The recalculation will be based on your age and your account balance at the end of the preceding year. We will also recalculate your installment amount if you roll over money to your TSP account or take an additional distribution from it.

  If you choose to request installments, you may schedule a date up to six months in the future for payments to begin.

• Making changes to installments

  You can stop or make changes to your installments at any time. In My Account, you can stop existing installments and request new installments. To make certain changes without stopping your installments, you must call the ThriftLine.

  To make the following changes to installments, you must first stop existing installment payments and then request new installment payments, which you can do in My Account or by calling the ThriftLine:

  • start, stop, or change direct deposit of your installments if payments go to more than one destination
  • change the dollar amount of your payments (for fixed dollar amount installments)
  • change the frequency of your payments (for fixed dollar amount installments)
  • change the source of your installments (traditional, Roth, or both)
  • change the installment type (fixed dollar amount or based on life expectancy)
  • switch from the Single Life Table to the Uniform Lifetime Table when taking required minimum distributions (RMDs)

  You can make the following changes without stopping installments if you call the ThriftLine:

  • start, stop, or change direct deposit of your installments if payments go to a single destination
  • change your federal tax withholding
  • start rolling over traditional money (not Roth) from your installments to an IRA or eligible employer plan (only if installments are of a fixed dollar amount and expected to last less than 10 years)
  • change or stop rollovers (if currently doing rollovers)

  After your initial installment start date, we’ll process subsequent installments on the fifteenth (or next business day) of the month they’re due. If you stop or change your installments after noon eastern time on that date, you’ll still receive any payment already processed.

  Important tax considerations:

  • When you make a new request for installments, we’ll recalculate the expected duration of those installments, which could affect withholding.
  • Receiving installments based on life expectancy is one of the exceptions to the 10% early distribution penalty tax. However, the penalty can be applied retroactively if you stop your life expectancy installments or take additional money from your account within five years of beginning your installments or before you turn 59½ years old.

  See the TSP booklet Tax Rules about TSP Payments (435kb) for more information.

Installments continue unless you stop them or until your total account balance equals zero. This is true even if you choose to have the installments come from your traditional balance first or from your Roth balance first. When you run out of money in your chosen source (traditional or Roth), payments will continue from the source you didn’t choose.