You can keep your money in the TSP if your account balance is $200 or more.
You'll be able to:
- Enjoy the TSP's low administrative expenses.
- Move money into your account from an IRA or eligible employer plan.
- Change your investment mix with interfund transfers.
- Leave your money in the TSP until you reach age 70½.
- Avoid paying current Federal income taxes on any taxable amounts (and possibly penalties).
You have many withdrawal options. You can:
- Take just a partial withdrawal if you are eligible
- Choose one of the full withdrawal options:
- Single payment
- Monthly payments
- Life annuity
- A combination of above options
YOU MAY ALSO BE ELIGIBLE TO
- Transfer all or part of your withdrawal to an IRA or eligible employer plan.
Your decision has tax consequences:
- You will owe taxes on the taxable amount of any payment you receive from your account. The taxable amount of any lump sum payment or monthly payments lasting less than 10 years is subject to 20% Federal income tax withholding if not transferred to an IRA or eligible employer plan.
- You may also have to pay a 10% early withdrawal penalty. However, if you separate from service during or after the year you reach age 55 (or the year you reach age 50 if you are a public safety employee as defined by section 72(t)(10)(B)(ii) of the Internal Revenue Code), then the 10% early withdrawal penalty tax does not apply.
There are four important things you must do:
- Make sure the TSP has your current address at all times.
- If you have any TSP loans, pay them off within 90 days of your separation.
- Read the booklet Withdrawing Your TSP Account After Leaving Federal Service so that you fully understand your options.
- Read the tax notice "Important Tax Information About Payments From Your TSP Account."