- Eligibility Rules
- Consequences of Financial Hardship Withdrawals
- Tax Considerations
- Applying for a Financial Hardship Withdrawal
- Receiving Your Financial Hardship Withdrawal
The amount you withdraw from your account for a financial hardship must be limited to your financial need. To be eligible, your financial need must result from at least one of the following four conditions:
- Recurring negative monthly cash flow
- Medical expenses (including household improvements needed for medical care) that you have not yet paid and that are not covered by insurance
- Personal casualty loss(es) that you have not yet paid and that are not covered by insurance
- Legal expenses (such as attorneys' fees and court costs) that you have not yet paid for separation or divorce from your spouse
Additional Requirements for Financial Hardship Withdrawals
In addition to the eligibility rules, the following apply:
- You cannot withdraw less than $1,000.
- You may only withdraw your own contributions and any earnings those contributions have accrued.
- If you have two separate TSP accounts — a civilian TSP account and a uniformed services account — you can only make a financial hardship withdrawal from the account associated with your active employment at the time of your withdrawal. However, if both of your accounts are associated with your active employment, you can make a financial hardship withdrawal from each account.
- You are limited to only one financial hardship withdrawal in a 6-month period.
Your financial hardship withdrawal is subject to Federal income tax and, in some cases, state income tax. If you are younger than 59½, you may have to pay a 10% early withdrawal penalty tax. Any tax-exempt or Roth contributions included in your withdrawal are not subject to Federal income tax; neither are any qualified Roth earnings.
After making a financial hardship withdrawal, you cannot contribute to your TSP account for 6 months. If you are a FERS participant, you will not receive any Agency Matching Contributions for the period during which you are not making employee contributions. However, your Agency Automatic (1%) Contributions will continue.
If you are a member of the uniformed services, when your employee contributions from basic pay stop, any contributions from incentive pay and special pay, including bonuses, will also stop.
Your financial hardship withdrawal is considered a non-periodic payment for Federal income tax purposes. The TSP will withhold 10% of the taxable portion of your withdrawal for Federal income tax unless you increase or waive the amount of withholding.
Also, if you make a financial hardship withdrawal before age 59½, you may be subject to a 10% early withdrawal penalty tax on the taxable portion of your withdrawal. This penalty tax is in addition to the ordinary income tax you will have to pay.
For more detailed information about the tax rules affecting in-service withdrawals, refer to the Tax Notice, "Important Tax Information About Payments From Your TSP Account".
You can apply for a financial hardship withdrawal in one of two ways.
Online by Logging into My Account
Begin your Financial Hardship In-Service Withdrawal Request by going to My Account: Withdrawals. You can begin and, in some cases, complete your request online. It depends on whether you are required to obtain your spouse's signed consent and whether you want to receive your money by check or by direct deposit to your bank account.
Complete TSP-76, Financial Hardship In-Service Withdrawal Request, Financial Hardship In-Service Withdrawal Request and mail or fax it to the TSP. The form is available on this website, through the ThriftLine, or from your agency or service.
Your financial hardship withdrawal check will be mailed to the address in your TSP account record. However, if you make a paper withdrawal request, you may request to have your withdrawal payment electronically deposited into your checking or savings account.
It will take several weeks from the time the TSP receives your properly completed form until the time it sends your check.