The Thrift Savings Plan does not give you a lot of choices as to how to withdraw your money after you separate from federal service.  In general, employer-sponsored plans such as the TSP do not offer the flexibility in withdrawal options that you will find in an IRA.

There are three basic choices in withdrawing your money from the TSP.  The first choice is that of taking a single payment; the second is selecting a series of monthly payments; and the third is purchasing a single premium immediate annuity from MetLife.  We’ll take a more in-depth look at these choices in future articles.

You will be allowed two opportunities to withdraw money from the TSP.  You are allowed one partial withdrawal.  This partial withdrawal can be taken either while working (only available to those who are 59 ½ or over – called an “age-based withdrawal”), or when retired (no age requirement).

You’re also allowed a full (final) withdrawal.  This choice is rather inaptly named as your “full” withdrawal does not have to immediately deplete your account.  Your method of full withdrawal could be choosing a series of monthly payments that will continue for the rest of your life.

On the other hand, if you had your retirement funds in an IRA rather than in the TSP, you would not be restricted in your withdrawal options.  You would be able to take out your money willy-nilly, though you would be required to begin distributions at 70 ½, just like in the TSP.

Those who have both traditional and Roth balances in their Thrift Savings Plan are required to withdraw proportionally from those balances.  If 80% of your TSP account was in your traditional balance and 20% in your Roth balance, and you elected monthly withdrawals of $2,000, you would receive $1,600 from your traditional balance and $400 from your Roth balance each month.

The Thrift Board has announced that they intend to liberalize withdrawal options within the TSP, though they have, as yet, taken no concrete steps to do so.  They made this announcement in July 2015 and re-iterated it a few months ago in their new five-year plan.  Some of the changes that we can expect are:  1) allowing more “single withdrawals”; 2) allowing individuals to start and stop monthly payments (currently you cannot stop monthly payments, though you can change the amount once a year); 3) allowing more frequent changes to the amount of monthly payments; and 4) offering more annuity options.