While you are still employed by the Federal Government, you may access the
money in your TSP account through a loan or in service withdrawal.
TSP Loan Program
The TSP loan program gives you access to the money that you have contributed
to your TSP account and the earnings on that money. You must be in a pay status
to obtain a loan, because your regular loan payments will be made through
payroll deductions. You cannot borrow any agency contributions in your account
or any earnings attributable to those contributions.
There are two types of loans—a general purpose loan (repayment period 1–5
years) and a loan for the purchase of your primary residence (repayment period
The interest rate you pay for the life of the loan is the latest available
interest rate for the G Fund at the time your application is processed. The
interest you pay on the loan will go into your TSP account, along with
repayments of the loan principal.
You must pay a one-time fee of $50, which covers the cost of processing and
servicing the loan. The fee is deducted from the proceeds of the loan.
If you are covered by the Federal Employees Retirement System (FERS), the law
requires that if you are married, your spouse must consent to your TSP loan. If
you are covered by the Civil Service Retirement System (CSRS), the law requires
that if you are married, TSP must notify your spouse before your loan is
disbursed. These requirements apply even if you are separated from your spouse.
If you are considering a TSP loan, you should read the publication
TSP Loans. You can estimate your loan payments using the Loan Calculator.
TSP In-Service Withdrawals
There are two types of in-service withdrawals—age-based and financial
- Age-Based Withdrawal.
- You can make an age-based withdrawal of all or any portion
of your vested account balance if you are 59½ or older.
- Your request must be for at least $1,000 or for your entire
vested account balance (if your balance is less than $1,000).
- If you make an age-based withdrawal from your account, you
will not be eligible for a partial withdrawal from that account
after you separate from service.
- Age-based in-service withdrawal payments are considered eligible rollover distributions for Federal income tax
purposes and, as such, are subject to mandatory 20 percent
Federal income tax withholding. However, you can avoid tax
withholding on all or any portion of an age-based in-service
withdrawal payment by transferring the payment directly to a
traditional Individual Retirement Account or eligible employer
plan. You may also be eligible to transfer to a Roth Individual
Retirement Account; however, rules and restrictions apply.
- Financial Hardship Withdrawal.
- You may be able to make a withdrawal of your own
contributions and earnings based on a financial need that
results from at least one of the following four conditions:
negative monthly cash flow; medical expenses (including
household improvements needed for medical care); personal
casualty losses; or legal expenses for separation or divorce.
- The amount of the financial hardship withdrawal is limited
to your financial need. You cannot withdraw less than $1,000.
- A financial hardship in-service withdrawal is considered a
non-periodic payment for Federal income tax purposes. TSP will withhold 10 percent for Federal income tax from such a payment unless you submit Internal Revenue Service form W-4P, Withholding Certificate for Pension or Annuity Payments,
requesting a different amount of withholding or a waiver of
withholding. In addition, if you make a financial hardship
in-service withdrawal before age 59½, you may be subject to a 10
percent early withdrawal penalty tax. This penalty tax is in
addition to the ordinary income tax you will have to pay.
If you are covered by FERS, the law requires that if you are married, your
spouse must consent to your in-service withdrawal. If you are covered by CSRS,
the law requires that if you are married, TSP must notify your spouse before
your in-service withdrawal can be made. These requirements apply even if you are
separated from your spouse.
If you are considering an in-service withdrawal, you should read the
publication TSP In-Service Withdrawals.