Best Ways to Get Money Out of Your TSP

Getting money into your TSP is pretty easy.

It simply goes straight out of your paychecks and you don’t have to think about it much.

But getting money out of your TSP can be more complicated as it isn’t as familiar and it often has tax implications.

Here are some of the best ways to get money out of your TSP.

Retired Yet?

While there are ways to get money out of your TSP while working, this article is focused on those that are already retired.

Withdrawal Options

The TSP has 3 main ways to withdraw money:

TSP Annuity
Installment Payments
One-time withdrawals

TSP Annuity

The TSP annuity is my least favorite of all the withdrawals.

It locks you into a contract that you can’t change later even if your retirement goals change.

Check out this article for my full review of the TSP annuity.

Installment Payments

Installment Payments allow you to get a withdrawal from your TSP on a regular basis.

You can set it up for monthly, quarterly, or annual payments.

For example, you can ask the TSP to send you $1,000 per month and they’ll continue to do so until you tell them to stop or you run out of money.

You can start/stop/edit your payment basically at any time.

You can also ask the TSP to send you an installment payment based on your life expectancy. This means they’ll calculate how much they think you can withdraw consistently for the rest of your life and they’ll send you that amount.

One-time Withdrawal

The TSP also offers one-time withdrawals.

This may make sense for you for one-off needs or big purchases.

Come a Long Way

The TSP used to be very limited in its withdrawal options but has come a long way in the last 10 years.

The TSP is trying to become more user-friendly to encourage people to keep their money there throughout retirement.

What About an IRA?

Many people move their money to an IRA in retirement to have more options and flexibility but it does not make sense for everyone.

Here is a full comparison between the TSP and an IRA.

The Best Withdrawal Option?

There is no best option that works for everyone but most people that stay in the TSP use installment payments and/or one-time withdrawals.

The TSP annuity is by far the least common option used.

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Dallen J. Haws, CFP®, MBA

CEO and Lead Planner

Dallen is one of the most sought after federal retirement experts in the country.

He routinely speaks/consults with thousands of federal employees about their benefits and retirement. He is a self-professed nerd about helping those under FERS to maximize benefits, reduce taxes, and retire confident.

He is a regular contributor to Govexec and FedSmith and many other federal employee new sites.

When he is not perfecting retirement plans, you can find him training for triathlons or going on adventures with his family.

Common Questions

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Great question. Here are the 5 areas that we help our clients with:

-Retirement Planning: Planning for the day when work is optional

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One thing we found that clients really appreciate is that no other financial advisor is able to help them with their federal benefits as well as the rest of their financial lives like we can.

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