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Subject: CARES Act Withdrawal

The Coronavirus Aid, Relief, and Economic Security (CARES) Act became law on March 27, 2020 (Public Law No. 116-136). The CARES Act allows the Federal Retirement Thrift Investment Board (FRTIB) to create special withdrawal rules for Thrift Savings Plan (TSP) participants affected by COVID-19. In accordance with this law, the TSP has added a CARES Act withdrawal to its withdrawal options. A CARES Act withdrawal is a one-time withdrawal of up to $100,000 that participants can make from their civilian or uniformed services account. For those still in federal service, the usual requirements that a participant be at least 59 ½ years old or certify that he/she meets specific financial hardship criteria are waived.

CARES Act Withdrawal Eligibility

To be eligible for the CARES Act withdrawal, a participant must be a qualified individual. A participant is considered a qualified individual if he/she meets at least one of the following criteria:

  1. The participant is or has been diagnosed with the virus SARS–CoV–2 or with coronavirus disease 2019 (COVID–19) by a test approved by the Centers for Disease Control and Prevention (including a test authorized under the Federal Food, Drug, and Cosmetic Act).
  2. The participant’s spouse or dependent (as defined in section 152 of the Internal Revenue Code of 1986) is or has been diagnosed with such virus or disease by such a test.
  3. Due to COVID-19, the participant is experiencing adverse financial consequences as a result of the participant, the participant’s spouse, or a member of the participant’s household
    • being quarantined;
    • being furloughed or laid off or having work hours reduced;
    • being unable to work due to lack of child care;
    • having to close or reduce hours of a business;
    • having a reduction in pay or self-employment income; or
    • having a job offer rescinded or a start date for a job delayed.

Tax Implications

The TSP will not automatically withhold money from a CARES Act withdrawal for federal income tax, though a participant may request to have tax withheld.

Furthermore, a qualified individual receiving a coronavirus-related distribution can take advantage of the favorable tax treatment described below. In order to do so, the participant must designate the withdrawal as a coronavirus-related distribution when he/she files taxes. To do that, the participant must file Form 8915-E, which the IRS is expected to make available before the end of 2020.

Early Withdrawal Penalty Waived

The IRS will waive the 10% additional tax on early distributions.

When the Participant Must Pay Taxes on the Withdrawal

The taxable income from withdrawals made by qualified individuals may be spread “ratably” over a three-year period, starting with the year in which the participant receives the distribution. For example, if the participant receives a $9,000 coronavirus-related distribution in 2020, the participant could report $3,000 in income on his/her federal income tax return for each tax year – 2020, 2021, and 2022. This is optional; the participant can also choose to include all of the income in the year of the withdrawal.

Repaying Withdrawals

Participants cannot use a CARES Act withdrawal request to transfer any portion to an IRA or eligible employer plan. The CARES Act does, however, allow coronavirus-related distributions to be rolled over or repaid within three years of disbursement. The participant may repay all or part of the amount of a coronavirus-related distribution to an eligible retirement plan, provided that the participant completes the repayment within three years after the date the participant received the distribution. If the participant repays a coronavirus-related distribution, the distribution will be treated as though it were repaid in a direct plan-to-plan transfer so that the participant does not owe federal income tax on the distribution. The law allows the participant to repay coronavirus-related distributions to the plan from which he/she received it or to another eligible retirement plan.

Requesting a CARES Act Withdrawal

If the participant qualifies as an affected individual under the CARES Act, the participant can use the online tool on the TSP website ( to apply for a CARES Act withdrawal. To access the tool, participants must log into My Account and click on “Withdrawals and Changes to Installment Payments.” This online tool will guide the participant through the request by prompting the participant to answer questions. Based on those answers, the online tool will generate Form TSP-96 (WEB), CARES Act Withdrawal Request, which is a summary of the request with the participant’s provided information. Depending on the circumstances, the request may be completed entirely online. If signatures or additional information is required, the participant will need to print the form, gather the necessary signatures, have the form notarized, and then send it to the TSP. The form must be received by the TSP no later than December 15, 2020. Note: If a participant alters any of the pre-printed information on the TSP-96, the form will not be processed.

Additional Information for Participants

The most recent information about how the CARES Act impacts the TSP can be found on our COVID-19 withdrawals page.

July 11, 2020
Questions concerning this bulletin should be directed to your Agency Technical Services representative.

Chapter 2, General information