What to do with your TSP after the military
Nothing in the rules makes you move a TSP balance of $200 or more when you separate. A loan, a check made out to you or a small balance can still start clocks you didn't know about.
- A TSP balance of $200 or more is paid when you separate only if you ask, until required minimum distributions start. Under $200, the TSP pays you 60 days after separation or its notice, whichever is earlier, with 20% withheld.
- A taxable, rollover-eligible TSP payment made to you has 20% withheld. You have 60 days to roll it over, replacing that 20% from other money. A direct rollover has no withholding.
- Under 59½, the taxable part of a payment you keep faces a 10% additional tax unless an exception applies. The IRS lists the age-55 separation exception for employer plans, not IRAs.
- Under the Blended Retirement System, leaving before two years of service forfeits the automatic 1% and its earnings. Your own contributions stay yours.
- A loan you don't repay, or start repaying, by the TSP notice's date becomes a taxable loan offset; the TSP says to pay off within 90 days of separation. You can roll an offset over by your return's due date.
If you're getting out this year, your Thrift Savings Plan (TSP) balance may be the largest pile of savings you built in uniform. Separating doesn't force a decision on it. A balance of $200 or more isn't paid out unless you ask.
The rules with clocks are narrower, and they're easy to trip. Any taxable TSP payment that could be rolled over has 20% withheld if it's paid to you. A TSP loan you don't repay, or start repaying, by the date in the TSP's notice becomes taxable income. A balance under $200 is paid to whatever address the TSP has on file. And under the Blended Retirement System, leaving before two years costs you the automatic 1% contributions.
| Option | Limit or deadline | Tax consequence |
|---|---|---|
| Leave it in the TSP | Nothing is paid until you ask, at $200 or more, and you can't add contributions. RMDs start at 73 for births before 1960 and 75 for 1960 or later, per the TSP's table; the IRS regulation differs for some birth years, see below | The taxable part is income in the year you take it out; Roth and combat-zone tax-exempt money are treated differently |
| Direct rollover to an IRA or employer plan | Ask the TSP, not the new plan. One institution for your traditional balance; tax-exempt combat-zone money only if the receiver accepts it | No withholding and no tax when it moves. Pre-tax money into a Roth IRA is taxed that year, and Roth money can't go to a traditional IRA |
| Roll over a payment yourself | 60 days from the day you receive it | 20% of the taxable part is withheld, so you replace it from other money to roll over all of it. What you don't roll over is income, plus 10% more under 59½ unless an exception applies |
| Single payment | Partial payments start at $1,000; a full withdrawal waits until any loan is closed | 20% of the taxable part is withheld; you can ask for more, not less. The taxable part is income that year, plus 10% more under 59½ unless an exception applies |
| Installments | Monthly, quarterly or yearly; a fixed amount of at least $25 or by life expectancy; one series at a time | The taxable part is income when you receive it. Under 10 years and not by life expectancy: 20% withheld, can be rolled over. Otherwise withheld as if single with 0 exemptions, can't be rolled over. The 10% additional tax can apply under 59½ unless an exception applies |
| Life annuity | At least $3,500, counted separately for your traditional and Roth balances; can't be changed or ended once bought | Buying it isn't taxable; the vendor reports payments, and the taxable part is income in the year you receive it |
| Roth in-plan conversion | At least $500 a request, up to 26 requests a year; you need a vested balance of at least $500, and other limits in 5 CFR 1650.60 apply, such as keeping $500 in each contribution balance; in effect since January 28, 2026 | The regulation defines a conversion as a taxable rollover to your Roth balance; ask a tax preparer how much tax it would add for you |
| Combine with a civilian TSP account | After the TSP learns you've separated; the account you roll needs a vested balance of $200 or more; any loan closed and any RMD taken first | A tax-exempt traditional balance can't move; each balance goes into its own type. The sources read do not state a tax result for combining; ask the TSP |
What happens when you separate
For the TSP, you separate when you're discharged from active duty or the Ready Reserve, or moved to inactive status or a retired list. A discharge doesn't count if, within about a month, you return to active duty, join or stay in the Ready Reserve, or start a federal civilian job covered by FERS or CSRS, the federal civilian retirement systems. Joining a drilling Guard or Reserve unit counts as Ready Reserve. The regulation describes affiliation as taking part in a drilling reserve unit. For a uniformed services loan, the TSP counts a move to inactive Ready Reserve status as separating. If you are going to the Individual Ready Reserve, ask the ThriftLine whether the TSP shows you as separated.
On terminal leave you are still on active duty until you are discharged, and the TSP's test is the discharge, so ask your service which separation date it will report. Our final pay and terminal leave guide explains that leave. Your service, not you, reports your separation to the TSP, and nothing is paid until it has. The regulations don't say how long that takes.
Your vested balance at separation decides what happens next. Under $200, the TSP pays it to your address of record in one payment, not by electronic transfer, 60 days after it's notified or after your separation date, whichever is earlier, once any loan is closed. It withholds 20%, and you can't leave the money in the TSP or have it rolled over directly, though you can roll it over yourself within 60 days. Under $5.00, the balance is forfeited to the TSP, and you can reclaim it by contacting the TSP. At $200 or more, nothing is paid until you ask.
Everyone who entered service on or after January 1, 2018 is in the Blended Retirement System (BRS). Earlier entrants either opted in during 2018 or stayed in the legacy High-36 system, which has no automatic or matching contributions. Under BRS, DoD adds 1% of your basic pay automatically, and up to 4% in matching begins 2 years and 1 day after you first enter service. Separate with at least two years of service and you keep the 1% and its earnings; with less, they're forfeited. Nothing else is at risk: your own contributions are always yours, and matching vests immediately.
Staying in the TSP and keeping access
With a vested balance of $200 or more, nothing in the rules makes you take money out when you separate, and the TSP says you can leave it in. You can't contribute after you leave, but the account keeps earning, you can change how it's invested, and eligible money can still come in: traditional and Roth employer plans and traditional IRAs, but not Roth IRAs.
The TSP follows the IRS rule that required minimum distributions (RMDs) start at a set age: 73 if you were born before 1960 and 75 if you were born in 1960 or later, per the TSP's own table. The IRS regulation sets other ages for births before 1951 and leaves 1959 open; check your birth year with the ThriftLine.
The first is due by April 1 of the year after you reach that age and have left service, and later ones by December 31. Only your traditional balance counts, because Roth money isn't subject to RMDs, and an RMD can't be rolled over. The TSP calculates and sends it; an amount not paid to you on time may carry a 25% excise tax.
You manage the account in My Account on tsp.gov or by phone through the ThriftLine. Setup takes a username, a password and a ThriftLine PIN, plus a one-time passcode sent to your phone by text or voice call. A .mil email address is an option for that passcode, not a requirement. Add or change these methods in the TSP's separate online account management portal.
Once you've left, you change your TSP mailing address in My Account. Before then, the Air Force, Army, Navy and Marine Corps use the TSP section of myPay and the Coast Guard and NOAA Corps use Direct Access; myPay's "Correspondence Address" section doesn't change it. An address or bank account must be on file at least seven days before money can go there. If you close the account, keep your address current through January of the next year so your tax information reaches you.
Taking a payment
With $200 or more, you have four options, alone or in any combination: a partial payment, a total payment, installments, or a life annuity. You can take a partial payment while installments run, and end installments by taking the rest in one payment. You choose whether money comes from your traditional balance, your Roth balance, or both pro rata.
You ask in My Account or by calling the ThriftLine; there is no paper withdrawal form. Requests entered before noon Eastern are processed that night, and you can change or cancel one only until noon on its processing day. A processed payment can't be reversed or put back into the TSP.
The taxable amount you don't roll over is income in the year you receive it, and if you're under 59½ the IRS adds a 10% tax on it unless an exception applies. The TSP withholds federal income tax from the taxable part only, at the rates in the table above, and reports its distributions and withdrawals on Form 1099-R to the IRS and, where applicable, state tax agencies.
One exception to the 10% tax depends on your age when you separate. The IRS lists an exception for payments from an employer plan such as the TSP if you separate from service during or after the year you reach 55, but not for IRAs, and the TSP's tax booklet words it the same way. A reservist called to duty for more than 179 days may also be eligible for relief on a payment received during that duty. The IRS's table lists other exceptions, and Form 5329 is the IRS form for additional taxes on retirement plans; ask a tax preparer how to report an exception.
Rolling it over or converting to Roth
In a direct rollover, the TSP sends your money straight to an individual retirement account (IRA) or an employer plan, so nothing is paid to you. You ask the TSP, in My Account or on the ThriftLine, not with the new plan's forms. Your traditional balance can't be split between two institutions, and the IRS requires no withholding.
If a rollover-eligible payment is made to you instead, 20% of the taxable part is withheld, even if you plan to roll it over. You have 60 days from receipt to deposit it, making up the 20% from other money to roll over all of it. On a taxable $10,000 payment, $2,000 is withheld and $8,000 reaches you.
Since January 28, 2026, you can also convert traditional TSP money to Roth without leaving the plan, in up to 26 requests a calendar year of at least $500. Ask a tax preparer how a conversion is taxed in your case.
If you have combat-zone money
Pay you earned in a combat zone may have gone into the TSP tax-exempt. In the traditional balance, the TSP tracks those contributions as your tax-exempt balance, a separate line inside it; their earnings sit in the traditional balance but aren't counted in the line. Tax-exempt pay put in the Roth balance is treated like the rest of your Roth money.
When you take money out of the traditional balance, the contributions are tax exempt and their earnings are taxable, and the TSP gives you a statement showing the split. You can't choose which money comes out first, because any payment from the traditional balance is prorated between tax-deferred and tax-exempt money. The 10% additional tax doesn't apply to the tax-exempt part.
In a rollover, tax-exempt contributions go only to an IRA or plan that accepts them, and a traditional IRA must certify that it does. The TSP doesn't take tax-exempt money back, so a rollover out is one-way. A tax-exempt traditional balance also can't move to a civilian TSP account, as the section on federal civilian jobs explains.
If you have a TSP loan
A TSP loan doesn't end when you separate, and you can't take a new one. The TSP's loan page gives three options: keep the loan active, pay it off by the required deadline, or let it be foreclosed and accept the taxable part of the balance and interest as income. For a loan on a uniformed services account, you count as separated when you leave the uniformed services or move to inactive Ready Reserve status.
The TSP's page for separating members says, "If you have any TSP loans, pay them off within 90 days of your separation." But the regulation and the Loans booklet put the deadline to pay off or start payments in the TSP's notice to you, with no day count, and the booklet's 90-day sentence is about a civilian-account loan after a reported separation. The notice date is the one the regulation uses, so ask the ThriftLine which date applies to your loan.
| If you | What happens | Tax consequence |
|---|---|---|
| Keep repaying after you separate | Pay by check, money order or direct debit; the TSP makes the schedule monthly if needed, and the maximum time limit for paying off the loan still applies | No loan offset is declared |
| Pay it off by the required deadline | The loan closes, and a full withdrawal can be paid. The TSP's page says within 90 days of separation; its notice sets your date | No loan offset is declared |
| Do neither by that date | The balance and accrued interest are declared a loan offset, which the TSP calls a foreclosure, and you can't repay it | Reported to the IRS as taxable income for that year, on Form 1099-R. The 10% additional tax may apply under 59½ unless you turn 55 or older that year |
| Start repaying, then miss a payment | Make it up by the end of the cure period, or the balance becomes an offset. The cure period can't run past the last day of the quarter after the one the payment was due, so a payment due in November 2026 would have until March 31, 2027 | As above if it becomes an offset |
| Want to roll over an offset | Use your own money to roll it over by the due date, including extensions, of your tax return for the year of the offset | You avoid the immediate income tax and the 10% tax on the amount you roll over. Qualified Roth earnings in a loan offset after separation aren't taxed |
An offset is an actual distribution, so it can be rolled over and the 10% rule can apply, but the rollover deadline is the longer one below, not 60 days, and a separated participant can't repay it. You can roll it over with personal funds, back into the TSP, another eligible plan or an IRA, by the due date of your tax return for the year of the offset, including extensions.
Going to a federal civilian job
If you start a job covered by FERS or CSRS within about a month of your discharge, you haven't separated for TSP purposes. The regulation counts through the 31st full calendar day; the TSP's Distributions booklet bars a distribution after a break of less than 31 full calendar days, so they differ on day 31. Once you've contributed as a civilian too, you have two accounts, each with its own withdrawal rules, and after you separate from one kind of service you can take payments only from that account.
Once the TSP knows you've separated, you can combine the accounts in what it calls an inter-plan rollover. You can only roll the account tied to your separation into your other one, and the account you roll needs a vested balance of $200 or more. Any loan on it must be closed first, and any RMD due for the year must be taken. A married service member needs the spouse's consent.
A tax-exempt balance in the traditional part can't move to the civilian account. The TSP's booklet says to keep the uniformed services account to hold that money, which keeps earning tax-deferred until you take it out.
Whether your military time also counts toward your federal civilian retirement is a separate question. The military service buyback guide covers it.
Your spouse and your beneficiaries
If you're married, your spouse has a say in several of these choices. On a total withdrawal of a vested balance over $3,500, your spouse has a right to a joint life annuity with a 50% survivor benefit, unless your spouse gives signed consent, on paper or electronically, to something else. At $3,500 or less, that doesn't apply to a total withdrawal. Your spouse must consent to any partial withdrawal, whatever the amount, and to any change in installment amount or frequency. The TSP can excuse the signature if your spouse can't be found or exceptional circumstances make asking inappropriate, but says exceptions are rare.
Naming a beneficiary doesn't need your spouse's consent or knowledge. You name one in My Account or through the ThriftLine; the designation must be on file when you die, and the TSP can't honor a will. After a divorce, the designation on record still pays unless you change it. With no designation, the TSP pays your spouse, then your children, then your parents, then your estate's executor or administrator, then your next of kin under state law.
A written designation must be signed and dated by you and one witness aged 21 or older, and it must reach the TSP within 365 days of your most recent signature. The TSP pages on naming a beneficiary online that we read don't mention the witness or the 365 days. Survivor choices on military retired pay are covered in the Survivor Benefit Plan guide.
Questions to ask before you move money
For comparison, the TSP reports 2025 total expense ratios of 0.034% to 0.051%, or $3.40 to $5.10 on every $10,000, and says cost is only one of several factors.
Ask the TSP:
- Has my service reported my separation date, and what address does the TSP have for me?
- Do I have a loan, and what date does the TSP's notice give?
- If I have tax-exempt money, which part would a rollover move first, how do I request combining accounts, and can the rest of my traditional balance move?
- How do the witness and 365-day rules apply to a beneficiary designation made online?
Ask the receiving institution and a tax preparer:
- Does the IRA or plan accept a direct rollover from the TSP, and tax-exempt money?
- What fees does the IRA or plan charge, and how do they compare with the TSP's total expense ratios?
- Am I under 59½, and does an exception apply, such as the age-55 rule?
- Would a Roth rollover or conversion add to my taxable income this year?
The ThriftLine is 1-877-968-3778, Monday to Friday, 7 a.m. to 9 p.m. Eastern; you need your 6-digit PIN, and the 711 relay service works for hearing or speech disabilities. Military OneSource, at 800-342-9647, is open to retired and honorably discharged members until 365 days after the end of service, and its page then points to the VA. Ask whether financial counseling is included.
One example, start to finish
Example (fictional) Marcus Bell is a fictional 31-year-old Army staff sergeant who entered service in April 2019, so he's in BRS. He separates on June 30, 2027, for a private-sector job. His TSP statement shows $46,500, all in the traditional balance with no combat-zone contributions, and a $5,000 loan he has been repaying through payroll. He is married to Elena.
At $46,500, nothing is paid out unless he asks, and Elena would have to consent to any partial withdrawal. The TSP's page says to pay the loan off within 90 days of separating, which counted from June 30, 2027 would be September 28, 2027. The regulation uses the date in the TSP's notice, not that count, so he checks the notice date with the ThriftLine and sets up direct debit before the notice date. Had he missed it, the $5,000 plus interest would be income for the year of the offset, and unless an exception applied, the 10% additional tax at his age would be $500 on the principal alone.
He prices a $10,000 single payment from his traditional balance. The TSP would withhold 20%, or $2,000, and $8,000 would reach him. A payment received on September 2, 2027 would give him until November 1, 2027 to roll it over, and to roll over all $10,000 he would add $2,000 from other money. With no rollover, the whole $10,000 is 2027 income, and the 10% additional tax would be $1,000.
For now, he makes no move on the balance and notes what each option in the table would involve. In the TSP's account management portal, he moves his passcode to his personal phone; in My Account he adds his new mailing address and names a beneficiary, which needs no consent from Elena. By June 29, 2028, which is 365 days after he separates, he calls Military OneSource with the questions above.
Common questions
Can I keep my TSP after I leave the military?
Yes, if your vested balance is $200 or more. Nothing is paid until you ask. You can't add contributions, but the account keeps earning. Under $200, the TSP pays you the balance with 20% withheld, and you can't leave it in.
Do I lose my TSP money if I leave before two years?
Only the government's automatic 1% and its earnings, and only under BRS. Matching starts 2 years and 1 day after you first enter service, so none exists to lose, and DoD's fact sheet says it vests immediately. Your own contributions are always yours.
Is there a penalty for taking money out of my TSP after I leave?
If you're under 59½, the IRS adds a 10% tax to the taxable amount you keep, unless an exception applies. One is separating from service during or after the year you reach 55, which the IRS lists for employer plans and not IRAs. The part from tax-exempt combat-zone contributions isn't subject to it.
What happens to my TSP loan when I separate?
You can keep repaying by monthly check, money order or direct debit. The TSP's page says to pay off within 90 days of separating, while the regulation sets the deadline in the TSP's notice. If you do neither by then, the balance and interest become a loan offset, taxable income for that year. You can roll an offset over until your tax return's due date, including extensions.
Can I still get into my TSP account after I lose my .mil email?
Yes, if you have a personal phone number set up to receive the passcode. Add it in the TSP's separate account management portal before your .mil address closes; if you can't sign in, call the ThriftLine. Sign-in takes a username, password and ThriftLine PIN, and a .mil address is only an option.
Does my spouse have to sign for a TSP withdrawal?
If you're married and in the uniformed services, yes for any partial withdrawal, whatever the amount. A total withdrawal of a vested balance over $3,500 needs your spouse's signed consent to anything but a joint and survivor annuity; at $3,500 or less it needs none.
This is general information, not tax, legal or investment advice for your situation. For free help, call the ThriftLine at 1-877-968-3778 (Monday to Friday, 7 a.m. to 9 p.m. Eastern) or Military OneSource at 800-342-9647. Military OneSource is open to retired and honorably discharged members until 365 days after the end of service. While you're still serving, you can also meet with a personal financial manager through your installation to learn about TSP options.
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Sources
- 5 CFR 1690.1, TSP definitions, last amended January 28, 2026
- 5 CFR 1650.21, information provided by employing agency or service
- 5 CFR 1650.11, post-employment distribution options, last amended May 15, 2024
- 5 CFR 1650.23, accounts of less than $200
- 5 CFR 1650.22, accounts of $200 or more
- 5 CFR 1650.2, general rules for post-employment distributions
- 5 CFR 1600.18, uniformed services and civilian accounts
- 5 CFR 1603.3, service requirements
- 5 CFR 1603.2, basic vesting rules
- U.S. Air Force: Blended Retirement System, updated January 30, 2026
- 5 U.S.C. 8440e, TSP contributions for members of the uniformed services
- Military OneSource: Federal Thrift Savings Plan
- 5 CFR 1655.14, loan repayments, last amended December 18, 2025
- Federal Register: Curing Missed Loan Payments (90 FR 59042), December 18, 2025
- 5 CFR 1655.15, loan offsets
- 5 CFR 1655.1, loan definitions, last amended December 18, 2025
- 26 CFR 1.72(p)-1, plan loans treated as distributions
- IRS: Retirement topics, loans, reviewed February 26, 2026
- 26 U.S.C. 402, taxability of beneficiary of employees' trust
- 5 CFR 1650.12, single payments
- 5 CFR 1650.13, installment payments
- 5 CFR 1650.14, annuities
- 5 CFR 1650.17, changing or cancelling a request
- U.S. Air Force: Thrift Savings Plan (TSP), updated March 12, 2026
- IRS: Retirement topics, exceptions to tax on early distributions, reviewed December 11, 2025
- 26 U.S.C. 72, annuities and certain proceeds
- IRS: About Form 5329, reviewed August 3, 2026
- 26 U.S.C. 7701, definitions (Thrift Savings Fund)
- IRS Publication 3, Armed Forces' Tax Guide, 2025 edition
- 5 CFR 1650.25, rollovers out of the TSP, last amended January 28, 2026
- 5 CFR 1600.33, combining accounts
- 5 CFR 1600.30, rollovers into the TSP
- Federal Register: Roth In-Plan Conversions (91 FR 1672), January 15, 2026; effective January 28, 2026
- IRS: Rollovers of retirement plan and IRA distributions, reviewed May 31, 2026
- IRS: Topic no. 413, rollovers from retirement plans, reviewed September 24, 2026
- 26 U.S.C. 401(a)(9), required distributions
- 26 CFR 1.401(a)(9)-2, required minimum distributions
- 5 CFR 1650.1, TSP withdrawal definitions, last amended January 28, 2026
- 5 CFR 1650.16, required minimum distributions
- 5 CFR 1651.2, order of precedence
- 5 CFR 1651.3, designating a beneficiary
- 5 CFR 1650.61, spousal rights
- 5 CFR 1650.64, exceptions to spousal requirements
- FRTIB: Federal Retirement Thrift Investment Board
- Military OneSource: Personal finance
- Military OneSource: Eligibility for services
- 5 CFR 1650.60, Roth in-plan conversions, effective January 28, 2026
- TSP: Leaving uniformed services, updated August 18, 2026
- TSP: Withdrawals in retirement, updated September 14, 2026
- TSP booklet: Distributions, no printed date; file modified September 15, 2026
- TSP booklet: Tax Rules about TSP Payments, no printed date; file modified April 23, 2026
- TSP: TSP Loans, updated September 14, 2026
- TSP booklet: Loans, no printed date; file created January 26, 2026
- TSP: Update your mailing address, updated August 20, 2026
- TSP booklet: Summary of the Thrift Savings Plan, text current as of January 1, 2026
- TSP: Access your account, updated September 16, 2026
- TSP: Contact, updated September 18, 2026
- TSP: Forms and resources, updated September 11, 2026
- TSP: Expenses and fees, updated September 17, 2026
- DoD: Blended Retirement System defined contribution fact sheet, 2017 fact sheet