TSP After You Leave the Military: Keep It, Roll It, or Withdraw

Not financial or tax advice. Educational only. Read TSP's own booklets before you request anything. TSP withdrawals can't be reversed once they're processed.

Your TSP doesn't disappear when you get out. Here's what you can do with it, and the deadlines worth knowing first.

Do these before you separate

Per TSP:

Fix your TSP address in myPay. Use the TSP section. Changing the "Correspondence Address" in myPay does not update your TSP address.
Pay off any TSP loan within 90 days of separation.
Read the TSP tax notice and the booklet on withdrawing after leaving federal service.

Option 1: Leave it in the TSP

If your vested balance is $200 or more, you can leave it where it is. You can't make new contributions after you separate. But your money keeps earning, you can still change funds, and you keep TSP's low costs. Per the TSP distributions booklet, you can also roll money in from traditional IRAs and eligible employer plans, but not from a Roth IRA.

If your vested balance is under $200, TSP pays it out automatically and withholds 20% for federal tax.

Option 2: Roll it over

You can roll eligible withdrawals into an IRA or a new employer's plan. Traditional money stays tax-deferred if it goes into a traditional IRA or plan. Moving traditional money to a Roth IRA is allowed, but you'll pay tax on it that year. Roth TSP money can't go to a traditional IRA. Check that the receiving account will accept the rollover first.

Option 3: Take money out

TSP offers four methods as a separated participant, and you can combine them:

Partial distribution, at least $1,000 each time
Total distribution: closes the account, and you can't roll money back into TSP later
Installments: monthly, quarterly, or annually, and you keep control of your investments
Annuity purchase: lifetime monthly payments bought through TSP's vendor

Cash withdrawals of traditional money are taxable, and early withdrawals can carry an IRS penalty. Read TSP's Tax Rules about TSP Payments booklet before you cash anything out.

Going to a federal civilian job?

You'll get a separate civilian TSP account. Per 5 CFR 1600.33, you can combine the two after separation, but with limits:

Tax-exempt contributions, for example from a combat zone, can't move to the civilian account.
Traditional and Roth balances stay separate.
Any loan must be closed first.
Your spouse has to consent.