How long does it take to get money from thrift savings plan?

If you need cash immediately to pay for medical expenses, college education, home improvements, etc. and you don't have any other source of income, you may consider tapping into your Thrift Savings Plan (TSP). Once you request a withdrawal from your TSP account, it can take several days to receive the withdrawal.

TSP can take 7 to 10 days to process a withdrawal request and make a disbursement. If you are yet to receive the funds, you can check the status of your withdrawal by logging into your TSP plan or calling ThriftLine. Once the funds have been paid, you will receive a disbursement notification from the retirement plan.

How long does it take for TSP to process a withdrawal?

If you are still employed by the federal government or you are a member of the uniformed services, you may be allowed to make an in-service withdrawal. To request a withdrawal, log in to My Account on the TSP website, and go to the "Withdrawals and Changes to Instalment Payments" tab on the menu. You can use the withdrawal tool to initiate the withdrawal. Once you have submitted the withdrawal request, it can take about 10 days to receive the payment.

If you are making a withdrawal as a separated TSP participant, the duration it takes to receive payments may depend on several factors. First, once you have retired from the federal service, your former agency or service must report your separation before you can make a withdrawal request. Usually, your former agency must report your separation within 30 days after leaving the agency.

Also, if you have an unpaid TSP loan, you will be asked if you want to keep the unpaid balance and have the agency convert it into a taxable distribution before you can make a withdrawal. If you want to pay off the outstanding TSP balance, you will have to clear the unpaid balance before you can be allowed to make a post-separation withdrawal. If you are eligible to make a withdrawal, and you don’t have an outstanding TSP loan, you can submit a withdrawal request. It can take 7 to 10 days for the TSP plan to consider your request and disburse the withdrawal.

How to withdraw from TSP after leaving federal service

There are several methods of withdrawing money from a TSP account as a separated participant. You can choose to request a withdrawal using one or a combination of several methods. 

Here are the main withdrawal options you have:

Partial distribution

You can make a withdrawal of $1,000 or more from your TSP account in a single payment. There is no limit on the number of partial withdrawals you can make, but the TSP plan can only process a single withdrawal in any 30-day period. You can make partial withdrawals while still receiving post-separation installments.

If you are age 59 ½ or older and you are still working as a federal service employee, you may be allowed to make up to four in-service withdrawals per year.

Total distribution

If you want to take all your TSP money at a go, you can request a full withdrawal from your TSP account. When you request a total distribution, TSP will disburse your full balance, and the account balance will be $0. If you are receiving periodic installments when you request a total distribution, the installment payments will stop, since you won't have any money remaining. Taking a total distribution means that you will no longer be able to transfer money into the TSP plan from other plans like 401(k).

Installments

Once you have separated from service, you can opt to take monthly, quarterly, or annual installments. The installments will continue until you stop them, or your TSP account balance falls to zero. This applies if you choose to receive payments from your traditional TSP first or from your Roth TSP first. Once you deplete the selected plan, installment payments will continue from the other source.

When you choose installment payments, you can set the payments to a fixed dollar amount or based on your life expectancy. If you choose to receive a fixed dollar amount, you choose the amount of payments you want to receive in each installment, usually at least $25. If you choose to base installments on your life expectancy, the installment payments will be based on the IRS life expectancy tables; the first installment will be based on your age and account balance at the time of the first installment.

Annuity purchase

You can use part of or all your TSP funds to purchase an annuity from an external annuity vendor. When you purchase an annuity, it means you pay now in exchange for monthly payments that last for a specific period or the rest of your life. The TSP plan will purchase the annuity from the annuity provider, and the money used to purchase the annuity will no longer be managed by you.

Withdrawal Rules for Rehired Participants

If you leave the federal civilian service or the unformed service, and you are then re-employed by the federal government, different withdrawal rules apply depending on how long the break lasted. If the break in service lasted less than 31 calendar days, you won't be eligible to make post-separation distributions from your TSP account. On the other hand, if the break in service lasted 31 or more calendar days, you are eligible to make a post-separation withdrawal, but it is not required.

If you choose to take a post-separation withdrawal, the request must be received, processed, and paid while you are separated from service. If you started receiving installment payments after you were separated, the payments will stop if you are rehired. However, if you are receiving annuity payments from an outside vendor, the payments will continue even after you have been rehired.