TSP Withdrawal Rules After You Leave Federal Service
Figures checked November 12, 2026 against primary sources
Once you leave federal service, you can leave your Thrift Savings Plan money where it is, take part or all of it, buy a life annuity, or set up installments. The TSP lets you mix those options. The age you leave matters for taxes: before 59½ a 10% additional tax generally applies, but the IRS waives it if you separate in or after the year you turn 55 (50 for specified federal law enforcement officers, corrections officers, customs and border protection officers, federal firefighters and air traffic controllers). Every rule here comes from tsp.gov or the IRS.
The Short Answer
| Rule | What the TSP or IRS says |
|---|---|
| Keep your account | Yes, if your vested balance is $200 or more |
| Options after you leave | Partial, total, annuity purchase, installments, or any mix |
| Partial withdrawal minimum | $1,000 |
| Annuity purchase minimum | $3,500, counted separately for traditional and Roth |
| Fixed installment minimum | $25 per payment |
| Same-night processing | Requests in before noon Eastern time, business days |
| Can you undo it? | No. Processed withdrawals cannot be reversed |
| 10% additional tax | Generally applies before 59½, unless an exception applies |
| Separation exception | Leave in or after the year you turn 55 (50 for specified public safety employees; see the rule of 55 section) |
You Do Not Have to Withdraw
The TSP: "You can keep money in your TSP account as long as you want to." You do not need to request withdrawals until you reach the age when required minimum distributions (RMDs) start. Our RMD table covers that age and the IRS divisors.
- Balance test: you can keep the account after you separate as long as your vested balance is $200 or more.
- You keep control: you still choose how the money is invested, even with no new contributions. See TSP funds.
- Money can still come in: you can roll over money from eligible employer plans and traditional IRAs.
The Four Withdrawal Options
The TSP lists four ways for a separated participant to take money out, and says you can use "any combination of them that you choose."
| Option | What happens | Key limits |
|---|---|---|
| Partial distribution | You take a set amount; the rest stays invested | At least $1,000. Allowed even while you get installments |
| Total distribution | You take everything; balance goes to $0 | You can no longer move money into the TSP. Any installments stop |
| Annuity purchase | The TSP buys you a life annuity from its outside vendor | $3,500 minimum per balance (traditional and Roth separately). Cannot be changed or cancelled. No commissions |
| Installments | Automatic payments monthly, quarterly or annually | Fixed amount of at least $25, or based on IRS life expectancy tables |
Annuity or installments? With an annuity you give up the money and control of it in exchange for monthly payments for life (or two lives with a joint annuity). With installments the money stays in your account, invested as you choose, and payments last only as long as the balance does.
Installments in Detail
- Two ways to set the amount: a fixed dollar amount of at least $25, or an amount the TSP computes from IRS life expectancy tables. Life-expectancy installments are recalculated each January.
- Timing: you can schedule the first payment up to six months ahead. After that, payments are processed on the 15th of the month.
- How long: they continue until you stop them or your total balance reaches zero.
- Changes: you can stop or make changes to your installments at any time. In My Account you can stop existing installments and request new ones. To make certain changes without stopping them, such as tax withholding, you must call the ThriftLine.
Tax note on life-expectancy installments. They are one of the exceptions to the 10% early tax. But the TSP warns 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."
How Requests Are Processed
- Where: log in to My Account or call the ThriftLine.
- When: requests are processed each business day. In before noon Eastern time: processed that night. After noon: the next business processing night.
- Changing your mind: you can cancel or change a request only until noon on the day it is scheduled to be processed.
- No undo: "Withdrawals and distributions cannot be reversed once they've been processed."
Before you request money, the TSP points you to its Distributions and Tax Rules about TSP Payments booklets, linked from its withdrawals in retirement page.
TSP Withdrawal Age and the 10% Early Tax
Age matters for tax. The IRS: money withdrawn from a retirement plan before 59½ is an early distribution, and "Individuals must pay an additional 10% early withdrawal tax unless an exception applies."
Exceptions that matter most to TSP participants:
- Separation from service in or after the year you turn 55 (50 for specified public safety employees). See the next section.
- Life-expectancy installments, subject to the five-year and 59½ rule above.
At 59½ or older the 10% tax does not apply, because it covers only distributions taken before 59½.
The 10% sits on top of regular tax. The IRS: "Most retirement plan distributions are subject to income tax and may be subject to an additional 10% tax."
The Rule of 55 (and 50) for the TSP
The IRS lists "separation from service" as an exception to the 10% tax when "the employee separates from service during or after the year the employee reaches age 55 (age 50 for public safety employees of a state, or political subdivision of a state, in a governmental defined benefit or defined contribution plan)."
Federal public safety employees at 50. The IRS says the age-50 exception "also includes specified federal law enforcement officers, corrections officers, customs and border protection officers, federal firefighters, private-sector firefighters, and air traffic controllers," and that it covers governmental plans "such as the TSP."
Three points to get right:
- It is the year you leave that counts, not the year you withdraw. Leaving in a year before the year you turn 55 does not qualify, even if you wait until 55 to withdraw.
- It applies to the plan, not an IRA. The IRS table marks this exception "yes" for plans and "no" for IRAs. Money you take from an IRA does not get it.
- It removes the 10% only. Income tax rules still apply to the withdrawal.
Our rule of 55 guide covers the same exception for 401(k) plans, with more detail on who counts as a public safety employee.
Still Working? In-Service Withdrawals
The TSP: "There are two types of TSP withdrawals for active federal civilian workers and members of the uniformed services: financial hardship and age-59 ½." If you are a married FERS participant or in the uniformed services, your spouse must sign a consent waiver.
| Financial hardship | Age 59½ | |
|---|---|---|
| Who | Active federal civilian workers and uniformed services members with a qualifying financial need | Age 59½ or older |
| What you can take | Your own contributions and their earnings | Vested money only |
| 10% early tax | May apply if you are under 59½ | Does not apply at 59½ or older |
You can take up to four age-59½ withdrawals per calendar year.
Hardship reasons the TSP accepts: recurring negative monthly cash flow; unpaid medical expenses not covered by insurance; unpaid personal casualty losses not covered by insurance; unpaid legal expenses for separation or divorce; and losses from a FEMA-declared major disaster. A hardship withdrawal must be at least $1,000, and you must certify the hardship under penalty of perjury.
A TSP loan is the other way to reach your money while working. The TSP notes that withdrawals "permanently reduce your retirement savings as well as any earnings you would've earned."
Sources & Methodology
- Thrift Savings Plan: Withdrawals in retirement (page last updated October 19, 2026): keeping the account, four options, minimums, installments, processing.
- Thrift Savings Plan: In-service withdrawals (page last updated September 14, 2026): hardship and age-59½ rules.
- Internal Revenue Service: Retirement topics: Exceptions to tax on early distributions (page last reviewed or updated December 11, 2025): the 10% additional tax and the separation-from-service exception, IRC Section 72(t)(2)(A)(v) and 72(t)(10).
Method notes. All three pages were re-read on November 12, 2026, and every figure on this page is quoted from them. We do not show TSP fund returns, the annuity interest rate, RMD ages or income tax rates; see the linked pages for those.
This article is for general information and is not financial, tax or retirement advice. Wealthy Pot is not affiliated with the Thrift Savings Plan, the Federal Retirement Thrift Investment Board or the IRS. Rules were checked on 2026-11-12. Withdrawals cannot be reversed: read the TSP's booklets and consider a tax professional before you request one.
FAQ
At what age can I withdraw from my TSP without penalty?
At 59½. Earlier, the 10% additional tax generally applies unless an exception fits, such as leaving federal service in or after the year you turn 55 (50 for specified federal public safety employees).
Does the rule of 55 apply to the TSP?
Yes. The IRS separation-from-service exception covers employer plans, and the IRS names the TSP for the age-50 public safety version. It does not cover IRAs.
Do I have to take money out of the TSP when I retire?
No. You can keep the account if your vested balance is $200 or more. You only have to start taking money out when required minimum distributions start.
What is the minimum TSP partial withdrawal?
$1,000 after you separate. A financial hardship withdrawal while working also has a $1,000 minimum.
How many age-59½ TSP withdrawals can I take while working?
Up to four per calendar year.
Can I cancel a TSP withdrawal?
Only until noon Eastern time on the day it is scheduled to be processed. Once processed, it cannot be reversed.
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"TSP Withdrawal Rules After You Leave Federal Service." Wealthy Pot, 2026. https://wealthypot.com/tsp-withdrawal-rules/
