Bulletin 14-U-2
May 30, 2014

Service Responsibilities When Thrift Savings Plan Participants Separate From the Uniformed Services

This bulletin discusses the actions that service representatives must take when a Thrift Savings Plan (TSP) participant separates from the uniformed services.

TSP participants are uniformed service members who have TSP accounts, even if they are not currently contributing. If you cannot verify the existence of a TSP account by any other means, contact your Agency Technical Services (ATS) representative.

I. Service Responsibilities

When a TSP participant separates from the uniformed services, service representatives must:

  1. Verify ALL the personal information on file with the TSP.

  1. Timely submit an Employee Data (06) Record (EDR) to the TSP to update the separation code and the separation code date, and to provide the corrections or updates made to any other fields. (See TSP Bulletin 05-8, Thrift Savings Plan Employment Code, dated July 19, 2005, and TSP Bulletin 01-U-5, Processing Submissions from the Uniformed Services, dated August 29, 2001 for more information.)

  1. Remind the participant that he or she will be responsible for updating his or her address of record following separation. Separated participants can update their address by calling the ThriftLine (1-877-YOU-FRST), by logging into the online account section of the TSP website, or by submitting Form TSP-9, Change in Address for Separated Participant.

  1. Explain the post-separation options to the participant. (See Section II)

  1. Explain that additional withdrawal information and forms are available on the TSP website, www.tsp.gov.

Because separating participants may choose to leave their money in the TSP, services should NOT provide them with withdrawal packages. Instead, services should direct separating participants to the TSP website, where the most recent versions of TSP materials may be found. This will help ensure that participants do not use an obsolete form when they eventually chose a withdrawal option. A limited selection of materials is also available by calling the ThriftLine.

II. Post-Separation Options

Participants with balances of less than $200 at separation will automatically receive their entire account balance in a single payment.

Participants with balances of $200 or more at separation may choose to simply leave their money in the TSP. During this period, they can continue to manage their accounts by making interfund transfers, and may also roll money into their TSP account from other qualified plans or IRAs. These participants will still have the full range of TSP withdrawal options whenever they choose, and will continue to take advantage of the TSP’s low administrative fees. Participants need not make a withdrawal decision until they turn 70½ (see the information on Required Minimum Distributions below).

Participants have several options when they decide to withdraw their money from the TSP, including:

  • Receiving scheduled monthly payments from the TSP;
  • Purchasing a life annuity;
  • Taking a partial withdrawal (provided they did not take an age-based, in-service withdrawal);
  • Withdrawing their account as a single payment; or
  • A combination of the above methods.

Separated participants who have a uniformed services and a civilian account also have the option of combining both accounts into one using Form TSP-65. For more information about combining TSP accounts, along with all the other options available to participants who have separated from the uniformed services, see the booklet, Withdrawing Your TSP Account After Leaving Federal Service, and the regulations at 5 CFR § 1650.

Although not required to withdraw their entire account balance, separated participants must begin to receive payments by April 1 following the calendar year they become age 70½, at which point they also become subject to the Internal Revenue Code’s Required Minimum Distribution (RMD) rules. Participants who are still members of the uniformed services at age 70½ must begin to receive payments by April 1 following the calendar year of their separation from the uniformed services. When participants elect to receive scheduled monthly payments, the TSP will ensure the amount received satisfies their annual RMD. More information about withdrawal requirements and RMDs may be found in the TSP Tax Notice, Important Tax Information About Your TSP Withdrawal and Required Minimum Distributions.

In an effort to make the withdrawal process easier for participants, and to prevent the submission of incorrectly completed forms, the FRTIB recommends participants use the online “withdrawal wizard” to fill out the appropriate withdrawal form(s) electronically. The withdrawal wizard is available to all separated participants by logging into the online account section of the TSP website and choosing “Withdrawals” from the Online Transactions menu.

To learn more about the available current withdrawal options, service representatives may want to attend the free training offered by the FRTIB. Specifically, we offer a one-day overview course on all aspects of the TSP for members of the uniformed services. Upon successful completion of the one-day course, service representatives may attend a more detailed one-day course on the TSP withdrawal options. For more information on TSP training, see the Training Information section of the TSP website.

Jim Courtney
Director, Office of Communications
Office of Communications and Education