Federal Managers Association

In the News

• Before you take money out of your TSP, weigh these trade-offs - August 14, 2026

• A withdrawal can affect everything from your tax bill and Medicare premiums to how long your savings last and what your heirs receive.

  Tammy Flanagan, Government Executive

  The Thrift Savings Plan can be one of the most valuable retirement assets for federal employees (as well as members of the uniformed services), but once you leave federal service, the distribution decision is not just a matter of deciding how much cash you need. There are other important considerations to understand before you can select the dollar amount you will need to make your retirement financially secure. Remember that once a TSP withdrawal is processed, it generally cannot be reversed, so these are all important considerations to understand before deciding on your distribution plan.

  If you have a minimum balance of $200, you may keep your money in the TSP. TSP elections for withdrawal include taking a partial distribution (minimum amount is $1,000), electing a total distribution, purchasing a life annuity (must have at least $3,500 to elect this option), setting up installment payments or combining methods.
  
  Keeping money in the TSP may be appropriate if you do not need immediate income, because the plan offers simple investment choices and historically low expenses. Installment payments can create predictable cash flow while leaving the remaining balance invested. A life annuity can provide income for life, but it is typically irreversible and may reduce flexibility for heirs or future emergencies. A lump sum may be useful for a specific need, but it can create a large taxable event and remove assets from a disciplined retirement structure.

  To read the full article, click here.

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