TSP is a long-term savings program designed to provide retirement income. Employees may withdraw funds upon retirement, separation, or death. In addition, employees may make in-service withdrawals under limited circumstances (see 597.3).
Persons who have separated or retired have several options for the withdrawal of TSP funds. Visit www.tsp.gov or call the ThriftLline for more information.
Persons separated with vested account balances of less than $200 are subject to the TSP automatic cash-out procedures. TSP will automatically send the person a check for the balance of his or her account after the Postal Service reports that the person has separated.
Participants who leave their money in the TSP following retirement or separation must adhere to required minimum distribution rules set by the Internal Revenue Service and the Thrift Savings Board.
In addition, separated participants can purchase an annuity that will make payments to them for life. For more information on TSP annuity options, see the TSP booklet Withdrawing from Your TSP Account for Separated and Beneficiary Participants, at www.tsp.gov/publications/tspbk02.pdf. The booklet is also available by clicking “Withdrawing Your TSP Account After Leaving Federal Service” listed under “Most popular resources” at www.tsp.gov.
Employees who do not begin withdrawing from their account by the required deadline will forfeit their account balance to the TSP. Employees may reclaim it, but will not receive earnings on it from the time they forfeited it.
The spouse of CSRS TSP participants is entitled to receive notice when the participant applies for a withdrawal after separation from the Postal Service. Participants must provide the TSP with their spouse’s correct mailing address.
Participants who are unable to provide their spouse’s address may be able to obtain an exception by submitting a completed TSP-16, Exception to Spousal Requirements, to the TSP.
Combining a civilian account with a uniformed-services account will change the rights of the participant’s spouse.
FERS TSP participants making partial withdrawal must obtain written, notarized consent from their spouses on the withdrawal form.
The spouse of FERS TSP participants who are making full withdrawal and have a total TSP account balance of more than $3,500 are entitled to a joint life annuity with a 50-percent survivor benefit, level payments, and no cash refund. For the participant to receive full withdrawal, the participant’s spouse must sign the waiver statement on the withdrawal waiving spousal right to the annuity.
Combining a civilian account with a uniformed-services account will also change the rights of the participant’s spouse.
In-service withdrawals provide employees with an opportunity to withdraw funds from their TSP account while still employed, including employees in nonpay status. Two types of in-service withdrawals are available:
- Age-Based Withdrawal. This allows employees who are 59 1/2 or older an option to withdraw all or a portion of their vested account balance.
- Financial Hardship Withdrawal. This allows employees, (regardless of age) who demonstrate financial hardship caused by covered events an opportunity to withdraw their own contributions and the earnings on those contributions, up to the amount of the documented hardship.
See TSPBK 12, In-Service “59 1/2” Withdrawals, or visit www.tsp.gov for more information.
TSP-75, Age-Based In-Service Withdrawal Request, and TSP-76, Financial Hardship In-Service Withdrawal Request, are available on www.tsp.gov and https://liteblue.usps.gov.
Certain court orders on file at the TSP that award payment from the account to someone other than the employee place a hold on the account and disallow approval of in-service withdrawals (see 598.1).
If a participant dies while still employed, the TSP distributes the participant’s TSP account balance in accordance with information on the participant’s completed Form TSP-3, Designation of Beneficiary, on file. If no beneficiary designation is on file, the account is distributed in accordance with the order of precedence required by law:
- To the surviving spouse.
- If none, to the child or children and descendants of deceased children.
- If none, to any surviving parents.
- If none, to the duly appointed executor or administrator of the estate.
- If none, to the next of kin who is entitled under the laws of the state in which the participant is living at the time of death.
The TSP pays any remaining balance in the same manner as described in 597.41 unless the participant purchased an annuity. In that case, the TSP provides benefits according to the annuity contract. For more information, see booklet TSPBK31, Death Benefits Information for Participants and Beneficiaries.
All TSP participating employees who separate or retire will receive a TSP withdrawal package at the time of separation. TSP-participating employees are all employees who have a TSP account, including the following:
- FERS employees who are not contributing and only receiving agency automatic contributions.
- Employees who are not currently contributing, but who have established an account in the past.
The TSP must provide a TSP withdrawal package to representatives (family members or other interested individuals) of deceased participating employees, including those in a nonpay status, who request to file death claim applications. Deceased employees are considered automatically vested in any agency automatic contributions, and earnings associated with those contributions.
The following booklets contain additional information on participants’ options:
- TSPBK02, Withdrawing from Your TSP Account for Separated and Beneficiary Participants.
- TSPBK12, In-Service Withdrawals.
The following applies to individuals who reenter government service after separating or retiring with a vested balance:
- Forfeited Balance. Any amount that was forfeited as a result of the previous separation remains forfeited.
- Civilian Service. Prior periods of civilian service that are still creditable are added to the current period to determine vesting.
- Withdrawing Fund in Equal Installments. The installment of individuals receiving equal installments from TSP will stop upon reemployment.
- Receiving an Annuity. The annuity will continue upon reemployment for individuals receiving an annuity.
