How to Withdraw Funds From a Federal Thrift Savings Plan
The Thrift Savings Plan (TSP) for federal employees is designed to disburse funds upon retirement and in certain other instances, such as for loans or account closure if you leave your job before retiring. Since the TSP is meant to help workers save for retirement, the plan places restrictions on how much or how often money may be withdrawn. It's easy to withdraw funds when you're ready to retire--here's how.
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Instructions
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Determine your best option for receiving your Thrift Savings Plan (TSP) funds upon leaving government employment. You may request fixed monthly payments or purchase a TSP annuity.
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Make a partial withdrawal upon retirement and request the remainder at a later date.
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Make a full withdrawal as one lump sum, monthly payments computed by the TSP, monthly payments in an amount specified by you or through the purchase of a TSP annuity.
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Request your money using the TSP Request for Withdrawal form that was sent to you prior to your withdrawal date or download it from the forms section of the TSP website (see Resources below).
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To withdraw money at other times, you can apply for a one-time, age-based withdrawal when you are 59 1/2. This money can be used for any purpose, but there are amount restrictions.
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If you meet certain requirements and pay taxes and penalties on the vested amount, you can apply for a financial hardship withdrawal.
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Tips & Warnings
Determine your withdrawal options before you need to use them. You should always know how to reclaim your savings in the case of emergency, and what penalties, if any, there will be.
If you have an additional source of income when you retire, you can leave your money in your TSP account to accrue further dividends until needed.
The TSP office will notify you before your withdrawal date and send you related tax and disbursement information.
Early withdrawal may carry penalties, including tax payment due, an additional penalty fee and inability to add to your account for a period of 6 months.
You must begin withdrawing funds from your Thrift Savings Plan account or annuity by April 1 following the year you reach age 70 1/2 or the year after you left federal service.
Rules and restrictions are subject to change, so confirm all details at the TSP website.
