TSP participants are allowed to take withdrawals from the Thrift Savings Plan while they are working, but only under specific circumstances. This article lists 13 things you should know about in-service withdrawals.

1. There are two types of in-service withdrawals; age-based and hardship.
2. An in-service withdrawal permanently depletes your TSP account; it cannot be paid back.
3. In order to take an age-based withdrawal, you must be at least 59 ½ years old.
4. You can take up to 4 age-based withdrawals in a year.
5. An age-based withdrawal is considered an eligible rollover distribution for federal income tax purposes.
6. Federal income taxes must be paid on any in-service withdrawal (except, of course, qualified withdrawals from your Roth balance).
7. Penalties may apply to hardship withdrawals if you are under age 59 ½ at the time you take the withdrawal.
8. Like any withdrawal, an in-service withdrawal will be taken proportionately from your Roth and traditional balances unless you specify otherwise.
9. There are 4 reasons for taking a hardship withdrawal:
a. Negative cash flow;
b. Legal expenses related to separation and divorce;
c. Unpaid medical expenses that are not covered by insurance; and
d. Unpaid casualty losses that are not covered by insurance.
10. A hardship withdrawal is limited to the lesser of:
a. Your demonstrated hardship; or
b. The amount of your contributions and earnings.
11. Documentation is not required for a hardship withdrawal, but you must swear, under penalty of perjury, that your statements are true.
12. The signed, notarized consent of your spouse is required if you are a FERS employee.
13. The TSP publication, In-Service Withdrawals (https://www.tsp.gov/PDF/formspubs/tspbk12.pdf) has in-depth information on the topic and was updated in September of 2019 to include all of the changes wrought by the TSP Modernization Act.


Before you take an in-service withdrawal, make sure that you are not shortchanging your future retirement security be taking money out before you retire.

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