Thrift Savings Plan–Loans, Withdrawals, and Refunds–Part 3

Dec 14, 2017

separation

So far in this series, we have covered the basics of the Thrift Saving Planemployee and agency contributions, and the differences between Traditional and Roth TSP accounts. The next couple of posts will look at loans, in-service and post-separation withdrawals, and refunds in your TSP account, with this post covering post-separation withdrawals.

Post-Separation Withdrawals

If your vested account balance is $200 or more after you leave federal service, you can leave your money in the TSP until later or withdrawal all or a portion of your account. Any withdrawal from your account will be made up of a proportional amount of Traditional and Roth money. If your vested account balance is less than $200 when you leave federal service, TSP will automatically send you a check for your account amount.

There are two types of post-separation withdrawals; partial and full.

Partial

You may take out $1,000 or more and leave the rest in your account until you decide to withdrawal, but you may only take one partial withdrawal from your account. And if you made an age-based in-service withdrawal, you aren’t eligible for a partial withdrawal.

Full

You may choose how your entire account will be distributed using one—or any combo of—the 3 options:

  • Single payment
  • Series of TSP monthly payments
  • Life annuity purchased for you by TSP (covered in the next post)

Single Payment

A single payment allows you to withdrawal your entire TSP account at one time in one payment.

Monthly Payments

This allows you to withdraw your entire account in a series of payments, paid to you each month from your account. You can also ask for a specific dollar amount each month or have TSP calculate monthly payments based on your life expectancy. If choosing a specific dollar amount, it must be at least $25.

At any time while receiving monthly payments, you can ask TSP to stop the payments and pay you your remaining account balance in a single payment. Once a year, you also can make changes to the dollar amount of the monthly payments you are receiving. Also, once a year, you can make a one-time switch to receive monthly payments based on the dollar amount rather than monthly payments based on life expectancy.

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