TSP withdrawal rules: how to take money out in 2026

Two sets of rules: before and after you separate

TSP withdrawal rules depend mostly on one question: are you still working in a TSP-eligible federal or uniformed services job? Current employees have limited options, because the plan is designed to protect retirement savings. Once you separate, whether you retire, resign or leave the military, a broader set of options opens up. You don't have to use any of them right away. According to tsp.gov, you can leave your money in the TSP after separation as long as your vested balance is at least $200, and you keep full control over how it's invested.

Withdrawals while you're still employed

The TSP offers two kinds of in-service withdrawals:

Financial hardship withdrawal

You must have a financial need for at least one of these reasons: recurring negative monthly cash flow; unpaid medical expenses not covered by insurance; unpaid personal casualty losses; unpaid legal expenses for separation or divorce; or losses from a FEMA-declared major disaster. The rules:

• The minimum is $1,000, and you can withdraw only your own contributions and their earnings.
• You must certify the hardship under penalty of perjury.
• The taxable portion is subject to federal (and possibly state) income tax. If you're under 59½, you may owe a 10% early withdrawal penalty tax.
• Married FERS participants and uniformed services members need their spouse's consent.

Age-59½ withdrawal

Once you're 59½ or older, you can take money out while still working:

• You can withdraw only vested money. The minimum is $1,000, or your full vested balance if it's less.
• You can take up to four age-59½ withdrawals per calendar year.
• The TSP withholds 20% federal income tax on the taxable portion unless you roll it over to an IRA or eligible employer plan.

A TSP loan is an alternative

A loan isn't a withdrawal. You repay yourself through payroll. tsp.gov lists a $50 fee for a general-purpose loan and $100 for a primary-residence loan. A loan avoids immediate taxes as long as you repay it, but the borrowed money earns nothing until it's repaid. A loan that isn't repaid can be declared a taxable distribution. See TSP loans for the details.

Your options after you separate

Once you've left federal service, tsp.gov describes four ways to take money out, and you can combine them:

Source: tsp.gov, Withdrawals in retirement, checked October 2026.

Installments

Installments are how many retirees turn the TSP into a "paycheck." With a fixed dollar installment, you choose the amount. With a life expectancy installment, the TSP calculates payments using IRS tables and recalculates each January based on your age and prior year-end balance. Unlike an annuity, the money stays invested and under your control, but payments last only as long as your balance does. You can model installments in My Account before committing, and you can schedule the first payment up to six months in the future.

Annuity purchase

An annuity provides guaranteed monthly income for life, or for two lives with a joint annuity. The payment depends on your age, the annuity type and the annuity interest rate index when you buy. The trade-off is permanent: per tsp.gov, once purchased, the annuity isn't part of your TSP account and "you cannot change or cancel the purchase." Some retirees annuitize only part of their balance to cover essential expenses and keep the rest invested.

Traditional vs. Roth source

If you have both traditional and Roth money and you're leaving some money in the account, you can specify that a withdrawal come from traditional only, Roth only or pro rata. This is a useful tax-planning lever that many people overlook.

The 10% early withdrawal penalty and the age-55 rule

Taxable withdrawals before age 59½ can trigger a 10% additional tax on top of regular income tax. The TSP's booklet Tax Rules about TSP Payments lists the exceptions. The most important ones for federal employees are:

• Separation in or after the year you turn 55. Payments after you separate during or after that calendar year aren't subject to the 10% penalty. This is a big advantage over IRAs, which generally require 59½.
• Qualifying public safety employees, including certain federal law enforcement officers, CBP officers, federal firefighters and air traffic controllers. The exception applies if they separate during or after the year they turn 50, or, under SECURE 2.0, with 25 years of service in a TSP-eligible position (TSP Bulletin 23-3). Your agency must report the "P" separation code. Otherwise you can claim the exception on IRS Form 5329.
• Annuity payments, death, total and permanent disability, substantially equal periodic payments, qualifying birth or adoption distributions (up to $5,000), and several other exceptions listed in the booklet.

Watch out: rolling TSP money into an IRA before 59½ can cost you the age-55 exception. IRA withdrawals don't qualify for it. If you might need money between 55 and 59½, leaving some of it in the TSP can be valuable.

How TSP withdrawals are taxed

• Traditional balance: Withdrawals of tax-deferred contributions and earnings are taxed as ordinary income. Combat-zone tax-exempt contributions are the exception, though their earnings are taxable.
• Roth balance: Your Roth contributions always come out tax-free. Earnings are tax-free if they're "qualified," which requires that 5 years have passed since January 1 of the year of your first Roth TSP contribution and that you're 59½, permanently disabled or deceased (tsp.gov).
• Withholding: For most payments the TSP must withhold federal income tax, and payments eligible for rollover generally have mandatory 20% withholding unless they're rolled over directly. The TSP does not withhold state or local tax, but it reports payments to your state of residence. Every payment is reported on IRS Form 1099-R.

Required minimum distributions (RMDs)

Once you've separated and reach your RMD age, the IRS requires you to take a minimum amount from your traditional balance each year (tsp.gov):

For civilian and uniformed services accounts, only the traditional balance counts. Roth TSP money isn't subject to RMDs, and Roth withdrawals don't count toward meeting your RMD. Beneficiary participant accounts follow different rules. If your withdrawals don't satisfy your RMD, the TSP sends a supplemental payment before the deadline. Delaying your first RMD to April 1 of the following year means you'll take two RMDs in one tax year.

Spousal rights

Married FERS and uniformed services participants need their spouse's notarized consent for partial withdrawals, regardless of amount. For a total withdrawal with a balance over $3,500, the spouse is entitled to a joint life annuity with a 50% survivor benefit unless they waive it in a notarized signature. For CSRS participants, the TSP notifies the spouse instead of requiring consent (tsp.gov).

Practical tips before you request

• Timing: Requests entered before noon Eastern time on a business day are processed that night, and you can only change or cancel them until noon on the processing day.
• Payment destination: A new bank account or address must be on file for at least seven days before it can receive a payment.
• Roth conversions first? Since January 28, 2026, the TSP has offered Roth in-plan conversions, which let you move traditional money to Roth and pay the tax now from outside funds. If you're subject to RMDs, you must take the year's RMD before converting.
• Coordinate with your pension and Social Security. The order in which you draw from different income sources can change your lifetime tax bill significantly.

Not sure your TSP balance can last? Our guide to TSP allocation by age covers sequence-of-returns risk, and TSP vs. Roth IRA explains how the two accounts differ at withdrawal time.

Frequently asked questions

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