Age 59 1/2 is significant in tax-advantaged savings plans such as the Thrift Savings Plan because under the tax code, that generally is the earliest that withdrawals can be made from such plans without incurring the 10 percent “early withdrawal” penalty.
In the TSP, an age-based withdrawal becomes available for active employees at age 59 1/2. You may make only one age-based withdrawal. Taking such a withdrawal does not affect your eligibility for a later TSP loan or a financial hardship in-service withdrawal. However, if you choose one, you will not be allowed to make a partial post-separation withdrawal.
You can continue to defer taxation of the money by having it transferred directly to an IRA or other eligible retirement plan. You can postpone taxation even if you receive the money directly, by depositing an equal amount into an IRA or other eligible plan within 60 days of receiving it, but there are complicated tax implications for doing so.
Money transferred or rolled over under these withdrawals is taxable when drawn out of the IRA or other retirement plan.
If you are a married FERS participant, you must obtain the consent of your spouse before you can receive a TSP in-service withdrawal, regardless of the amount. If you are a married CSRS participant, the TSP must notify your spouse before your withdrawal is approved.
If the TSP receives a qualifying order or legal process for the enforcement of back payment of alimony or child support, your account will be frozen for withdrawals. That means a withdrawal will not be approved and disbursed until the court order process has been completed.