Age-Based In-Service TSP Withdrawal Request

If you reach age 59½ while you are still a federal employee you may be eligible to make an age-based, in-service TSP withdrawal. The rules and eligibility criteria are pretty simple but you should always seek out good TSP Advice before you engage in an in-service withdrawal request.  Mistakes can and do happen.

– The amount of your withdrawal must be at $1,000, or your entire vested balance (if it is below $1,000). In any case, you can only withdraw funds in which you are vested, based on the number of years of your service.

Treatment of Age-Based In-Service TSP Withdrawal

If your TSP withdrawal results in an IRA rollover then your entire balance should simply roll into your new plan without any taxes or penalties of any kind. In the event you wish to withdraw your TSP balance and place a portion of that distribution into your checking account to be spent, then you will not be subject to the 10% TSP early withdrawal penalty, but distributions from the account will be subject to federal income tax, unless it’s a tax-exempted distribution such as withdrawals from your Roth TSP balance (if any). The withdrawal may also be subject to state income taxes.

If federal income tax is applicable, the withdrawal will be subject to a withholding. You may choose to increase this withholding amount, but you cannot decrease it. You should also be able to transfer (or rollover) funds into an IRA or eligible employer plan. The tax treatment of such a transfer or rollover will depend on what kind of funds are there in your TSP account, and also on the type of IRA or employer plan that you are transferring it into.

If you have a civilian as well as a uniformed services account then you can apply for an age-based, in-service TSP withdrawal only from the account which is associated with your currently active employment. If both accounts are associated with your active employment, then you would be entitled to one age-based withdrawal from each account.

 

To Download or print the TSP 75 Form please click here!