What Will Happen to My TSP When I Quit My Job?

Government workers can keep TSP accounts after leaving Federal service.
Government workers can keep TSP accounts after leaving Federal service. (Image: Jupiterimages/Photos.com/Getty Images)

Federal workers have access to a variety of job benefits provided by the U.S. government including Thrift Savings Plans that let employees of Federal agencies and the armed forces save money on a tax-advantaged basis. TSPs function similarly to 401(k) plans in that they allow workers to make pretax contributions and avoid taxes on savings until retirement. If your employment with the Federal government ends, the fate of your TSP depends on your account balance and the withdrawal option you choose.

Automatic Cash-Out

If the vested account balance of your TSP is less than $200 when your employment ends, you are subject to automatic cash-out. The vested account balance of your TSP is the amount of your account that you actually own; you always own your contributions, but certain automatic contributions the government makes on your behalf might not be vested until you complete two or three years of service. When an automatic cashout occurs, you receive a check for the entire amount of your account.

Leaving Money in a TSP

As long as your vested TSP account balance is $200 or more, you are free to keep your money in your TSP and continue to be considered a plan participant even after your employment with the Federal government ends. As a plan participant, you can keep money in the TSP until the year you turn age 70½, at which point you have to start making minimum required withdrawals each year. You can even consolidate your retirement plans by transferring money from other plans into your TSP.

Withdrawal Options

You have several options for withdrawing funds from your TSP after quitting your job. You can choose to make a one-time-only partial withdrawal to access some of your cash and leave the rest of your money in the TSP to be withdrawn later. You can also make a full withdrawal by taking the entire account balance all at once as a single payment or as a series of monthly payments. Cash you take out of a TSP is taxed as ordinary income in the year of withdrawal.


A rollover describes a transfer of funds from one retirement account to another. When you receive withdrawals from a TSP as lump-sum payments, you can roll the funds over into a different retirement account, such as an individual retirement account, by depositing the funds into the other account within 60 days. IRAs typically give you more control over your investments than employer-offered retirement plans like TSPs.

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