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 THRIFT SAVINGS PLAN (TSP) - ACCESSING MONEY IN YOUR TSP ACCOUNT WHILE EMPLOYED

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 1–15 years).

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 hardship.

  1. 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.
  2. 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.

 ACTION REQUIRED TO APPLY FOR A LOAN

  1. You can request a loan through the Account Access section of the TSP Web site or by completing a TSP-20, TSP Loan Application. Completing the request electronically through Account Access is the most efficient way to request a loan.
  2. If you have a pending application for a TSP loan or an in-service withdrawal at the time your request is received, your request will not be accepted. Only one request for a loan or in-service withdrawal is permitted at a time.
  3. Call the Thriftline if you have questions about loans.

 ACTION REQUIRED TO APPLY FOR AN IN-SERVICE WITHDRAWAL

  1. You can apply for an in-service withdrawal through the Account Access section of the TSP Web site or by completing a TSP-75, Age-Based In-Service Withdrawal Request, or a TSP-76, Financial Hardship In-Service Withdrawal Request (depending on the type of withdrawal you are requesting). Completing the request electronically through Account Access is the most efficient way to request an in-service withdrawal.

  2. If you have a pending application for an in-service withdrawal or a TSP loan at the time your request is received, your request will not be accepted. Only one request for an in-service withdrawal or a loan is permitted at a time.

  3. Call the Thriftline if you have questions about in-service withdrawals.
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