TSP Withdrawal Rules: Your Options After Federal Retirement

A TSP withdrawal is any money you move out of your Thrift Savings Plan after you separate from federal service, and you have a defined menu: leave the balance invested, take installment payments, take a partial or single lump sum, buy a life annuity, or roll to an IRA. Each choice is taxed differently and gated by age rules, so the option you pick shapes both your income and your tax bill.

Last reviewed: August 2026 | Written and reviewed by Craig Wear, CFP®, founder of Q3 Advisors

What are your TSP withdrawal options after you retire?

Once you separate from federal service, the TSP gives you five paths: leave the money invested, take installment payments, take partial or single (lump-sum) withdrawals, buy a life annuity through MetLife, or roll all or part of the balance to an IRA. You can also combine several at once, which the TSP calls a mixed withdrawal.

Keep your money in the TSP (and why you might)

You are not required to touch the account when you retire. Separated participants can leave the full balance invested and defer withdrawals until required minimum distributions begin at age 73. Many retirees keep the money in the TSP for its very low expense ratios and the G Fund, which is unique to the plan. The tradeoff is fewer investment choices and more limited beneficiary flexibility than an IRA.

Roll your TSP into an IRA

You can roll all or part of a traditional TSP balance to a traditional IRA, and a Roth TSP balance to a Roth IRA, as a direct trustee-to-trustee transfer with no tax due. An IRA opens a wider investment menu and can simplify qualified charitable distributions, available at age 70½ from an IRA, not directly from the TSP. If you are weighing an in-plan Roth strategy, see our TSP Roth conversion guide.

How do TSP installment payments work?

TSP installment payments send you money on a schedule you set: monthly, quarterly, or annually. You choose either a fixed dollar amount or payments based on IRS life-expectancy tables. Installments are the closest thing the TSP offers to a retirement paycheck, and traditional-source payments are taxed as ordinary income in the year you receive them.

Fixed-dollar vs. life-expectancy installments

With fixed-dollar installments you name the amount, for example $2,000 a month, and it continues until you change it or the balance runs out. With life-expectancy installments the TSP calculates each year based on your account balance and IRS tables, so the amount adjusts annually. Fixed-dollar gives you predictability; life-expectancy is designed to stretch the balance across your lifetime.

Can you change or stop installment payments?

Yes. You can change the amount, frequency, or source, switch between fixed-dollar and life-expectancy, or stop installments at any time through your online TSP account, and you can take a partial withdrawal while installments run. This flexibility lets you raise income in a low-tax year and reduce it when a pension or Social Security begins.

What is a partial or single (lump-sum) TSP withdrawal?

A partial withdrawal takes a portion of your balance and leaves the rest invested; a single withdrawal takes the entire remaining balance at once. Both are one-time distributions, not a schedule. Traditional-source amounts are taxed as ordinary income, and the TSP issues an IRS Form 1099-R for the distribution year.

The $1,000 minimum and the one-withdrawal-every-30-days rule

Each partial withdrawal must be at least $1,000, and the TSP allows only one withdrawal request every 30 calendar days. There is no lifetime cap on the number of partial withdrawals a separated participant can take, but the 30-day spacing means you cannot make several small requests in the same month. Many participants plan larger single requests rather than a rapid series of small ones.

When a single full withdrawal makes sense

A single full withdrawal often makes sense when you are rolling the entire balance to an IRA, consolidating accounts, or closing the TSP. Taken as cash rather than a rollover, a full traditional withdrawal is fully taxable in one year and can push you into a higher bracket, so many retirees who want the money out use a direct rollover instead.

Should you buy a TSP life annuity?

A TSP life annuity converts part or all of your balance into guaranteed monthly income for life, purchased through MetLife, the TSP annuity provider. It is a permanent decision: once purchased, the money is no longer an investable account balance. It can suit retirees who want longevity protection and are comfortable giving up liquidity and market growth.

The $3,500 minimum and the MetLife annuity trade-offs

The minimum to purchase a TSP life annuity is $3,500. In exchange for lifetime income you give up access to the principal, future market growth, and, depending on the payout option, the ability to leave that portion to heirs. Traditional-source annuity payments are taxed as ordinary income. Because the choice is irreversible, many investors annuitize only a slice of the balance.

Can you withdraw from your TSP before 59½ without a penalty?

Sometimes. Withdrawals before age 59½ are generally subject to a 10% early-withdrawal penalty on top of ordinary income tax, but two federal-specific rules create exceptions: the age-based in-service withdrawal at 59½ while still working, and the Rule of 55 for those who separate in or after the year they turn 55. Public-safety employees get an even earlier threshold.

The age-59½ in-service (age-based) withdrawal

If you are still a federal employee and have reached age 59½, you can take an age-based in-service withdrawal without the 10% penalty. You can take up to four age-based in-service withdrawals per calendar year, each at least $1,000. This lets working employees begin Roth conversions or move money to an IRA before they retire, while ordinary income tax still applies to traditional amounts.

The Rule of 55 (and the age-50 public-safety exception)

Under the Rule of 55, if you separate from federal service during or after the calendar year you turn 55, TSP withdrawals are not subject to the 10% early-withdrawal penalty, even before age 59½. For special-category employees such as law enforcement officers, firefighters, and air traffic controllers, the threshold drops to age 50, or any age with 25 years of covered service. Ordinary income tax still applies to traditional withdrawals.

When do TSP required minimum distributions (RMDs) start?

Required minimum distributions from the TSP begin at age 73 under the SECURE 2.0 Act. Your first RMD can be delayed until April 1 of the year after you turn 73, but every RMD after that is due by December 31. RMDs apply to the traditional balance; the Roth TSP no longer has lifetime RMDs.

RMDs begin at age 73, and rise to 75 for those born in 1960 or later

If you were born from 1951 to 1959, your RMD age is 73. If you were born in 1960 or later, your RMD age is 75, with the earliest age-75 RMD year falling in 2035. Your first RMD may be deferred to April 1 of the following year, but doing so stacks two RMDs into one tax year, which can raise your bracket and your Medicare premiums.

The 25% penalty for missing an RMD (and how to cut it to 10%)

If you miss an RMD or take too little, the IRS applies a 25% excise tax on the shortfall amount. Under SECURE 2.0, that penalty drops to 10% if you correct the shortfall within the two-year correction window and file IRS Form 5329. Because the TSP will not always calculate combined RMDs across outside accounts for you, many retirees confirm the full amount each year.

Roth TSP no longer has lifetime RMDs (2024 change)

Starting with tax year 2024, Roth balances inside the TSP and other employer plans are no longer subject to lifetime required minimum distributions, matching the long-standing treatment of Roth IRAs. This is a change many older ranking pages still get wrong. It means qualified Roth TSP money can stay invested and tax-free for your lifetime, and only your traditional balance drives your annual RMD.

How are TSP withdrawals taxed: traditional vs. Roth?

Traditional TSP withdrawals are taxed as ordinary income at your marginal federal rate, from 10% up to 37% in 2026. Qualified Roth TSP withdrawals are completely tax-free. Whether a Roth withdrawal is qualified depends on two tests, and mixing the two balances inside one account creates a coordination trap worth understanding before you set up payments.

Traditional TSP: ordinary income and the 20% mandatory withholding

Traditional withdrawals are taxed as ordinary income. The TSP applies 20% mandatory federal withholding to single withdrawals and to installment payments expected to last fewer than 10 years, unless you roll them over directly. That 20% is withholding, not your final tax: your actual bill could be higher or lower depending on your bracket, so the 20% often acts as a floor, with the difference planned for at filing.

Roth TSP: what makes a withdrawal “qualified” and tax-free

A Roth TSP withdrawal is qualified, and therefore entirely tax-free, when both tests are met: your Roth balance has been open at least 5 years, and you are at least age 59½ (or disabled, or the payment goes to a beneficiary after death). If you withdraw Roth earnings before both tests are met, the earnings portion becomes taxable, though your own contributions always come out tax-free.

The mixed-balance RMD-coordination trap to avoid

Your RMD is calculated only on the traditional balance, but installment payments can draw proportionally or traditional-first depending on your setup. Retirees with both traditional and Roth money can accidentally distribute more than the RMD requires, or draw down the wrong source, if they do not check the payment source setting. Reviewing your source election each year helps keep installments and RMDs from working against each other.

What is the best way to withdraw from your TSP?

There is no single right answer, because the goal is to manage lifetime taxes, not just this year’s. Many retirees spread withdrawals across tax years to stay inside a target bracket, coordinate with Social Security, and watch the IRMAA thresholds, which in 2026 begin above $109,000 of modified adjusted gross income for a single filer and $218,000 for joint filers. Crossing those lines raises your Medicare Part B premium of $202.90 in 2026.

A common approach is to fill the lower brackets early in retirement, before RMDs and Social Security stack on top, and to weigh whether converting traditional dollars to Roth first makes later withdrawals cheaper. For that decision, see our how much to convert to Roth guide and the Roth conversion break-even analysis. Higher earners can also review the 3.8% net investment income tax, which applies above $200,000 single or $250,000 joint.

Frequently asked questions

How much tax do you pay on a TSP withdrawal?

Traditional TSP withdrawals are taxed as ordinary income at your marginal federal rate, which ranges from 10% to 37% in 2026, plus any state income tax. The TSP withholds 20% for federal tax on lump sums and on installments expected to last under 10 years. Qualified Roth TSP withdrawals are tax-free. Your final tax may differ from the 20% withheld.

What is the best way to withdraw money from your TSP?

Many retirees spread withdrawals across several tax years to stay inside a target bracket, coordinate with Social Security, and avoid crossing the 2026 IRMAA thresholds of $109,000 single or $218,000 joint. Installment payments provide steady income, while partial withdrawals cover one-time needs. The right mix depends on your other income and tax situation, so review it with a qualified professional.

Can I withdraw from my TSP without penalty?

Yes, in several cases. After age 59½ there is no 10% early-withdrawal penalty. Under the Rule of 55, separating in or after the year you turn 55 avoids the penalty, and special-category federal employees qualify at age 50 or with 25 years of service. Rollovers to an IRA are also penalty-free. Ordinary income tax still applies to traditional amounts.

What is the Rule of 55 for TSP withdrawals?

The Rule of 55 lets you take TSP withdrawals without the 10% early-withdrawal penalty if you separate from federal service during or after the calendar year you turn 55, even before age 59½. For public-safety employees such as law enforcement, firefighters, and air traffic controllers, the age is 50, or any age with 25 years of covered service. Income tax still applies to traditional withdrawals.

At what age do I have to start taking money out of my TSP?

Required minimum distributions from your traditional TSP begin at age 73 if you were born from 1951 to 1959, and at age 75 if you were born in 1960 or later. Your first RMD can be delayed to April 1 of the year after you reach RMD age. Roth TSP balances no longer have lifetime RMDs as of 2024. See our 2026 RMD guide.

Can I take a partial withdrawal from my TSP?

Yes. A separated participant can take partial withdrawals of at least $1,000 each, leaving the rest of the balance invested. The TSP allows one withdrawal request every 30 days, and there is no lifetime limit on the number of partial withdrawals. Traditional-source amounts are taxed as ordinary income, and the TSP reports each distribution on IRS Form 1099-R.

How often can I withdraw from my TSP after retirement?

You can take one TSP withdrawal request every 30 calendar days, with no lifetime limit on the number of partial withdrawals a separated participant can make. You can also run installment payments monthly, quarterly, or annually at the same time, and change or stop them at any point through your online TSP account.

Are Roth TSP withdrawals tax-free?

Qualified Roth TSP withdrawals are entirely tax-free. A withdrawal is qualified when your Roth balance has been open at least 5 years and you are at least age 59½ (or disabled, or it is paid to your beneficiary). Your own Roth contributions always come out tax-free; only the earnings become taxable if you withdraw before meeting both tests.