Retirement & Financial Planning Report

You do not need to make a Thrift Savings Plan withdrawal or even decide how you want to make a future withdrawal immediately upon separation. Making the withdrawal decision immediately on separation could result in taking out too much or too little from your TSP account. In many cases, it might be better to wait a bit and see how your retirement income and expenses are—or aren’t—matching your expectations.

You can leave your entire account balance in the TSP and do not need to submit any forms until you are ready to make a withdrawal election. The only exceptions to this are:

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* if your account balance is $200 or less, in which case you must act to prevent an automatic cashout; and

* if you are approaching the required withdrawal date, which is April 1 of the later of the year following the year you become age 70 1/2 or the year following the year you separate from service.

The TSP does not consider a delayed withdrawal a form of withdrawal. Rather, it views you simply as not having made a withdrawal election.

Nor does the TSP consider transferring all or part of a withdrawal to an IRA a separate form of withdrawal. Rather, that is just one of the features available in the lump sum and monthly payment options. That feature is not available in the annuity option, but the annuity option offers a range of other features not available in the other two.

All withdrawal decisions involving the total amount of money in your account are effective immediately after they are submitted (you will be able to make a one-time partial withdrawal and leave a decision on the rest of the money until later, however—unless you took an age-based in-service withdrawal, in which case post-separation partial withdrawals won’t be allowed). This will not mean you will have to make a decision immediately on retirement, of course, only that a choice affecting the entire balance will take effect immediately once you submit it.