The Thrift Savings Plan offers many different options and choices for an employee when they decide to retire. Currently, the four options an employee has are as follows:

  1. Take it out.
    • Take constructive receipt of your pre-tax account balance.
    • Required to pay taxes on entire amount of your Traditional TSP balance.
    • Possible tax consequences.
  2. Defer with TSP.
    • Leave it in the TSP until employee needs or wants to use it.
    • Continue to use the same funds, under the same rules as you had when employed.
    • Low management fees.
    • One-time, lifetime partial withdrawal allowed.
  3. Payments.
    • Set-amount payments are based off of participant’s wishes. Payment can be changed annually from October 15th to December 15th.
    • Life-expectancy payments are based off of participant’s life expectancy. Payments can change depending on the rate of return on the investment account.
    • Life-income payments are guaranteed for the life of the participant and provide income that cannot be outlived. There are various options for survivorship.
  4. Self-directed IRA.
    • Tax-free rollover to an account type of the participant’s choosing.
    • May offer additional flexibility, greater rate of return and/or higher income payments.
    • Can be done prior to retirement via an age-based in-service distribution.

Each one of these options has benefits and drawbacks. As every retiree has different objectives and needs for their retirement, knowing exactly what option to choose cannot be a one-size-fits-all approach. Careful planning, proper education and clear, definitive goals will help you decide between the above options and which ones are most appropriate for your retirement. For questions and assistance in properly planning for this crucial piece of your retirement, click here.

Receive Your Federal Benefit Workbook

Please fill out the form to the right with your information to receive your personalized federal benefit workbook.  This workbook will help you understand when you are eligible to retire, compute your monthly pension, show you how Social Security works and explain the options available to you with FEGLI and TSP.

By providing your information, a licensed insurance representative may contact you.