Payments
about TSP
Tax Rules
i
Table of Contents
Resources for Tax Information ............................................................. 1
Tax Reporting and Withholding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Traditional, Roth, or Both .................................................................. 1
Traditional Money ........................................................................... 1
Roth Money
................................................................................. 2
Payments That Include Both Traditional and Roth
.............................................. 2
Early Withdrawal Penalty Tax ............................................................. 3
Rolling Over Your TSP Payment ........................................................... 4
Traditional Rollovers ......................................................................... 4
Roth Rollovers
............................................................................... 6
Taxed Loans and Foreclosures ............................................................. 7
Taxes on Installments ...................................................................... 7
Installments Expected to Last 10 Years or More or Based on Life Expectancy ....................... 7
Installments Expected to Last Less Than 10 Years
............................................... 8
Life Expectancy Installments and the Early Withdrawal Tax Penalty
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Required Minimum Distributions .......................................................... 9
Ensuring You Receive Your RMD .............................................................. 10
RMDs May Not Be Rolled Over
................................................................ 11
Tax Withholding from RMDs
................................................................. 12
RMDs from Beneficiary Participant Accounts
.................................................. 12
Death Benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Qualifying Orders .......................................................................... 16
TSP Payments to Nonresident Aliens ..................................................... 17
Tax Withholding on Payments to Nonresident Aliens ........................................... 17
Beneficiaries and Court-ordered Payees
...................................................... 18
Special Tax Treatment if You Were Born Before January 2, 1936 ...................... 18
Table: Tax Treatment for TSP Payments ................................................. 19
Uniform Lifetime Table for Calculating Minimum Distributions ....................... 20
ii
Table of Contents (continued)
Single Life Table for Calculating Minimum Distributions ............................... 21
Glossary of Terms .......................................................................... 23
ThriLine Service Center .................................................................. 25
1
Resources for Tax Information
Before making any decisions about taking money from your Thri Savings Plan (TSP) account, you
should review the important information in this booklet. Because tax rules are complex, you may also
wish to speak with a tax advisor or the Internal Revenue Service (IRS). The TSP can assist you with your
withdrawal, but we cannot provide tax advice.
You can find more information on the tax treatment of payments from retirement plans like the TSP in IRS
Publication 575, Pension and Annuity Income; IRS Publication 590, Individual Retirement Arrangements
(IRAs); and IRS Publication 721, Tax Guide to U.S. Civil Service Retirement Benefits.
Tax Reporting and Withholding
We report all TSP distributions and withdrawals to the IRS, to the appropriate state tax agencies if
applicable, and to you on IRS Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-
Sharing Plans, IRAs, Insurance Contracts, etc. Distributions from beneficiary participant accounts will be
reported as death payments on IRS Form 1099-R.
In most cases, we are required to withhold part of the taxable portion of your distribution or withdrawal
for federal income tax. With certain types of payments, you may request that a dierent percentage
be withheld or that nothing be withheld. Usually you will have the option to make this request when
you’re submitting your distribution or withdrawal request in My Account. Contact us through one of the
ThriLine Service Center options listed at the end of this booklet for more details. The table on page 19,
“Tax Treatment for TSP Payments,” shows the withholding rates and the rules that apply to each type of
TSP payment.
We do not withhold for state or local income tax. This does not mean that you don’t have to pay state and
local taxes on your distributions and withdrawals. We report all TSP payments to your state of residence
at the time of the payment (if that state has an income tax). Consult a tax advisor or state or local tax
oicials for specific information.
Traditional, Roth, or Both
How payments from your TSP account get taxed depends on whether you have traditional money, Roth
money, or both. Members of the uniformed services might also have tax-exempt pay included in their
accounts as a result of contributing pay earned in a combat zone. Tax-exempt pay also must be designated
as Roth or traditional, but it creates a special circumstance when it’s part of your traditional balance.
Traditional Money
Any payment from your traditional balance is considered taxable income since you’ve deferred paying
taxes on this money. This includes your contributions, any agency or service contributions, and the
earnings.
2
Exception for tax-exempt pay: Traditional contributions you made from tax-exempt pay are not taxed
when withdrawn. But the earnings on those contributions are. Note that any withdrawal you make will
have the same percentage of tax-exempt pay that’s included in your traditional balance.
Roth Money
If you have Roth money, it’s separated into two pools: contributions and earnings. You’ve already paid
income tax on the Roth money you’ve contributed to your account, so money coming from this pool is not
taxed. The same is true of money that comes from the earnings pool if the distribution is “qualified.” Roth
earnings become qualified when you meet the following two conditions: (1) 5 years have passed since
January 1 of the calendar year in which you made your first Roth contribution and (2) You have reached
age 59½, have a permanent disability,
1
or are deceased. In summary, no part of a qualified distribution
of Roth money is taxed under any circumstances. The earnings portion of a nonqualified distribution is
taxed and may be subject to the early withdrawal penalty unless you transfer or roll over the payment.
No dierence for tax-exempt pay: In a Roth balance, tax-exempt pay is treated the same as the
rest of the balance. In fact, once it’s deposited into a Roth balance, tax-exempt money becomes
indistinguishable from the other contributions in the balance. Withdrawals and distributions of
contributions are not taxed, and the earnings are only taxed if they are not qualified.
Payments That Include Both Traditional and Roth
When a payment includes both traditional and Roth money, the tax rules for traditional balances apply
to the traditional portion, and the tax rules for Roth money apply to the Roth portion.
Example: Let’s say your account has a traditional balance of $60,000 and a Roth balance of $40,000.
You’ve been making Roth contributions for seven years. The Roth balance includes $15,000 in
contributions and $25,000 in earnings. You take a distribution of $1,000 from your account. You’re 57
years old, no longer working, and you do not have a permanent disability. If you do not roll over any of
the money to another retirement account, what portion of this distribution is considered taxable income?
Your account is 60% traditional, 15% Roth contributions, and 25% earnings on your Roth contributions.
Applying those percentages to your distribution means that the $1,000 you received is made up of $600
from your traditional balance, $150 from your Roth contributions, and $250 from the earnings on those
contributions.
Your TSP Account Your Withdrawal
$ 60,000 Traditional $ 600 Taxed as Income
$ 15,000 Roth Contributions $ 150 Not Taxed
$ 25,000 Roth Earnings $ 250 Taxed as Income
$ 100,000 Total $ 1,000 Total
1 We cannot certify to the IRS that you meet the Internal Revenue Code’s definition of a disability. Therefore, you must provide the
justification to the IRS when you file your taxes.
3
The traditional portion ($600) is all taxable. So are the earnings included in your Roth balance ($250).
That’s because, though you’ve met the five-year requirement, you’re not yet 59 ½ years old, so this
distribution is not qualified. The same would be true if you were over 59 ½ but five years had not passed
since January 1 of the year you first made a Roth TSP contribution. Both requirements must be met.
The portion that came from your Roth contributions ($150) is not taxable regardless of your age or the
amount of time that has passed since you first made a Roth contribution. So the answer is that $850
of your withdrawal is considered taxable income. If you were still working and this were an in-service
financial hardship withdrawal, this money would also be subject to the 10% early withdrawal penalty tax
unless you were covered by an exception.
Early Withdrawal Penalty Tax
If you receive a TSP distribution or withdrawal before you reach age 59½, in addition to the regular
income tax, you may have to pay an early withdrawal penalty tax equal to 10% of any taxable portion of
the distribution or withdrawal not rolled over. The additional 10% tax generally does not apply to
•
payments made aer you separate from service during or aer the year you reach age 55;
•
if you are a public safety employee as defined in section 72(t)(10)(B)(ii) of the Internal Revenue
Code, payments made aer you separate from service during or aer the year you reach age 50 or
have 25 years of service under the TSP;
•
up to $5,000 of any payment received within one year following a birth or qualified adoption in
accordance with section 72(t)(2)(H) of the Internal Revenue Code;
•
annuity payments;
•
automatic enrollment refunds;
•
payments resulting from total and permanent disability;
2
•
payments resulting from death;
•
payments made from a beneficiary participant account;
•
up to $1,000 per calendar year of payments used for emergency personal expenses;
•
up to $10,000 (or 50% of the vested account balance, whichever is less) of any payment received
within one year following domestic abuse;
•
payments made to an individual with a terminal illness;
•
payments made in a year you have deductible medical expenses that exceed 7.5% of your adjusted
gross income;
2 We cannot certify to the IRS that you meet this exemption requirement when your taxes are reported. Therefore, you must provide the
justification to the IRS when you file your taxes.
4
•
payments made as a qualified disaster recovery distribution as defined and limited by section
72(t)(11) of the Internal Revenue Code;
•
payments ordered by a domestic relations court; or
•
substantially equal payments over your life expectancy.
Roth withdrawals and the early withdrawal penalty: This penalty never applies to contributions you
made to your Roth balance or to qualified distributions of Roth earnings. It may apply to nonqualified
distributions.
Members of the uniformed services: The penalty tax does not apply to any portion of a TSP distribution
(including a taxed or foreclosed loan) that represents tax-exempt contributions from pay earned in a
combat zone.
If you are a reservist called to duty for more than 179 days, you may be eligible for relief from the 10%
early withdrawal penalty, provided that you received your TSP distribution between the date of the order
or call and the close of the active duty period. You may also be eligible to repay the distribution to an IRA
(not to the TSP). Consult with your tax advisor, legal assistance oicers, or the IRS regarding this relief.
Rolling Over Your TSP Payment
Not all types of distributions and withdrawals are eligible to be rolled over. Consult the table on page 19,
“Tax Treatment for TSP Payments,” to see which types are considered eligible.
Before you decide to roll over money from your TSP account to an IRA or eligible employer plan, you
should find out whether your IRA or plan accepts rollovers, the minimum amount it will accept, and
whether any tax-exempt contributions or Roth contributions will be accepted.
Keep in mind that the plan you choose to roll over your funds to may be subject to tax treatment and
plan rules (such as spousal consent rules) dierent from those that govern the TSP. The rules of the IRA or
eligible employer plan that receives the rollover will determine your investment options, fees, and rights
to payment. Specific details concerning your Roth money are explained later in this section.
The type of plan or account to which you can roll over your payment depends on whether the money you
roll over is from your traditional balance or your Roth balance.
Traditional Rollovers
Eligible rollover distributions of your traditional balance may be rolled over to a traditional IRA, an
eligible employer plan, a SIMPLE IRA, or a Roth IRA.
5
Direct Rollovers
If you choose to do a direct rollover of part or all of your eligible rollover distribution, the following rules
apply:
•
The rollover of your traditional balance to a traditional IRA or eligible employer plan will not be
taxed in the current year, and no income tax
will be withheld. You won’t be taxed on this money
until you withdraw it from the traditional IRA or the eligible employer plan.
•
Any part of your traditional balance that you roll over to a Roth IRA will be taxable in the current
year. No income tax will be withheld at the time of the rollover, so you may need to pay estimated
taxes to ensure you pay enough income tax during the year.
Indirect Rollovers
An indirect rollover occurs when you receive a payment of rollover-eligible money from your traditional
balance and then roll it over. When you do this, the following rules apply:
•
Because we’re making the payment directly to you and not to your other retirement plan or IRA, we
are required to withhold 20% of your payment for federal income taxes. This means that in order to
roll over your entire payment, you must use other funds to make up for the 20% withheld. Suppose,
for example, that you took a $10,000 distribution and wanted to roll it over to another retirement
plan or IRA. We would withhold $2,000 and send it to the IRS. You would receive $8,000. If you
wanted to roll over the entire amount of your distribution, you would need to use $2,000 of your
personal funds from another source, such as a savings account, and send it to the other retirement
plan or IRA along with the $8,000 payment you received.
•
If you do not roll over the entire amount of your eligible rollover distribution within 60 days,
3
the
portion not rolled over will be taxed and may also be subject to the 10% early withdrawal penalty if
you are under age 59½. (See page 3.)
•
If you roll over your payment from the traditional balance of your account to a Roth IRA, the full
amount rolled over will be taxable in the current year.
Special note regarding tax-exempt money: Not all plans accept tax-exempt money. Be sure to check
first before you make your request.
If you request a rollover of an eligible rollover distribution from your traditional balance and that balance
includes tax-exempt funds, we will always roll over money from the taxable portion of your balance first.
This helps reduce the amount of tax that you owe on any portion of the distribution that you receive in
the current year. We will only roll over tax-exempt money if your requested rollover amount is more than
the taxable portion of your distribution or withdrawal. If that’s the case, we’ll roll over enough of your tax-
exempt balance to complete your request.
3 The IRS may waive the 60-day rollover requirement in certain situations if you missed the deadline because of circumstances beyond
your control.
6
Roth Rollovers
You may roll over an eligible rollover distribution from your Roth money to a Roth IRA or a Roth account
maintained by an eligible employer plan that will accept Roth rollovers. Remember that the amount
rolled over will become subject to the tax rules that apply to the Roth IRA or the Roth account maintained
by the eligible employer plan. These tax rules are not identical to the rules governing your TSP Roth
money. Dierences between TSP Roth money and a Roth IRA include the following:
•
When you roll over your TSP Roth balance to a Roth IRA, the starting date for satisfying the 5-year
rule for qualified distributions does not carry over. Instead, you count from January 1 of the first
year you contributed to any Roth IRA.
•
Distributions and withdrawals from a Roth IRA can only be rolled over to another Roth IRA.
•
Distributions and withdrawals from Roth IRAs are paid first from contributions, then from earnings.
Direct Rollovers
If you choose to do a direct rollover of part or all of an eligible rollover distribution from your Roth
balance, the following rules apply:
•
The rollover of your Roth balance will not be taxed in the current year, and no income tax will be
withheld. Subsequent distributions from your Roth IRA or Roth eligible employer account may
be taxed and subject to the 10% early withdrawal penalty (see page 3) if that distribution is not
qualified. (See “qualified earnings” in the glossary.)
•
If part of your Roth balance is taxable (nonqualified distribution) we will only roll over the
nontaxable money if the taxable
portion of the payment does not satisfy your rollover amount. If
you choose to have us roll over only a portion of your payment, any taxable portion will be rolled
over first. This helps reduce the amount of tax that you owe on any portion of the payment that
you receive in the current year.
Indirect Rollovers
If we pay an eligible rollover distribution directly to you and you decide to roll it over, the following rules
apply:
•
You cannot roll over any part of a qualified distribution to an eligible employer plan. And you can
only roll over the earnings portion of a nonqualified distribution. (See “qualified earnings” in the
glossary.) These restrictions do not apply to rollovers into Roth IRAs.
•
If your payment is not a qualified distribution, the TSP is required to withhold 20% of the earnings
portion for federal income taxes. This means that in order to roll over your entire payment to a
Roth IRA or Roth employer plan, you must use other funds to make up for whatever amount we
withheld. (See the first point under “Indirect Rollovers” for traditional money on page 5.)
•
The taxable part of a nonqualified distribution is treated the same as a distribution of your
traditional TSP balance: whatever portion is not rolled over is taxed and, if you are under 59 ½, may
be subject to the early withdrawal penalty. (See page 3.)
7
Taxed Loans and Foreclosures
If you fail to repay your loan in accordance with your Loan Promissory Note, you will owe income taxes
on the outstanding balance of the loan as if you had received it as a withdrawal or distribution. (See
pages 1–3.)
Special conditions apply to Roth earnings in an unpaid loan balance:
•
If your loan was foreclosed aer you separated from service, any qualified Roth earnings will not be
subject to tax. Roth earnings that are not qualified will be subject to tax.
•
If your loan was taxed while you were still active (not separated from service), your Roth earnings
will be taxed, even if they were already qualified. That means you’ll be paying taxes today on an
amount that you would otherwise have been able to receive tax-free at retirement.
If your loan was foreclosed aer you separated from service, you can use personal funds to roll over any
or all of the taxable amount of the distribution back to your TSP account or to another eligible employer
plan or an IRA. You must complete this rollover by the due date (including extensions) for filing your
federal income tax return for the year of the foreclosure. By doing this rollover, you will defer income tax
on any taxable portion of the distribution. You will also avoid, if applicable, the additional 10% penalty
tax for early withdrawals. (See page 3.)
Taxes on Installments
The main factor in determining which IRS tax withholding requirements apply to the taxable portion of
your installments is how long those payments are expected to last.
4
When you start installments, you
choose to receive a fixed dollar amount (minimum $25) or to have us calculate an amount based on life
expectancy. Payments based on life expectancy and fixed-dollar-amount payments expected to last 10
years or more fall into one tax category; fixed-dollar-amount payments expected to last less than 10 years
fall into another. We determine the expected duration of your installments using your account balance,
the payment amount you choose, and an assumed earnings rate.
Installments Expected to Last 10 Years or More or Based on
Life Expectancy
•
The IRS categorizes these as periodic payments.
•
All installments based on life expectancy are included in this category, regardless of your age.
•
You’re not allowed to roll over any part of these payments to an IRA or eligible employer plan.
4 While you’re receiving installments, you may also choose to receive other types of distributions from your account. These distributions
could aect withholding on your installments.
8
•
We’re required to withhold for federal taxes from any taxable amount as if you are single with zero
exemptions unless you elect a dierent option.
5
You can request that a dierent percentage be
withheld or that nothing be withheld.
•
Any installment of this type—and any portion of such installment—that goes toward satisfying a
required minimum distribution (RMD) is subject to the rules described here. (See page 9.) This is an
exception to the usual RMD withholding rules.
Installments Expected to Last Less Than 10 Years
•
The IRS categorizes these as eligible rollover distributions.
•
You’re allowed to roll over all or part of these installments to an IRA or eligible employer plan. We
are not required to withhold for federal taxes from money you directly roll over to your other plan
or IRA unless you’re rolling over traditional money to a Roth IRA.
•
We’re required to withhold at least 20% of any taxable part of your installments that you do not
directly transfer. You may still roll over all or part of such payments to an IRA or eligible employer
plan. Generally, you have 60 days aer receiving payment to do the rollover. If you want to roll over
the full amount of the payment, you must use other funds to make up for the amount withheld.
•
You can instruct us to withhold a percentage that’s greater than 20%, but you cannot have less
withheld or waive withholding.
•
Any installment of this type—and any portion of such installment—that goes toward satisfying a
required minimum distribution (RMD)
(see below) is subject to a dierent set of tax rules:
The IRS categorizes these as non-periodic payments.
You’re not allowed to roll over RMDs to an IRA or eligible employer plan.
We’re required to withhold 10% of any taxable amount for federal taxes unless you elect a
dierent percentage. You can instruct us to withhold a dierent percentage between 0%
and 100%.
Life Expectancy Installments and the Early Withdrawal Tax
Penalty
Installments based on life expectancy are an exception to the early withdrawal penalty tax. But the
penalty can be applied retroactively if you do any of the following within five years of beginning your
installments or before you reach age 59½, whichever comes later:
•
stop your life-expectancy-based installments
•
switch them to installments of a fixed dollar amount
•
take a distribution from your TSP account in addition to your life-expectancy-based installments
5 Installments initiated before 2023 will continue to have withholding as if you are married with three dependents unless you chose a
dierent option or do so in the future.
9
Doing any of those things in that period of time will make you liable for the penalty tax on the installments
you previously received.
Required Minimum Distributions
If you have a federal civilian or uniformed services account, you must begin receiving “required minimum
distributions” (RMDs) once you have separated from service and reached a specific age. The applicable
age is gradually increasing, so it depends on when you were born. Table 1, below, will allow you to find
your applicable age.
We calculate the amount you’re required to receive using your age, your traditional balance at the end
of the previous year,
6
and the IRS Uniform Lifetime Table, which is on page 20. Your RMD calculation will
include only your traditional balance, and only distributions from your traditional balance will count
toward satisfying the RMD amount. Distributions of Roth money won’t count toward satisfying your RMD
because Roth money in your account isn’t subject to RMDs. (See page 12 for information about RMDs
from beneficiary participant accounts, which have dierent rules.)
Note: If your TSP account record has your date of birth or separation from service recorded incorrectly, or
if your agency or service is late in reporting your separation, you may not receive a payment that satisfies
the RMD by your required beginning date (defined below). If this happens, you may be subject to an
excise tax of 25% on the amount that was not paid to you on time. (The excise tax is reduced to 10% if you
meet the conditions of section 4974(e) of the Internal Revenue Code.) To avoid this excise tax, you must
be sure that the information in your TSP record is correct and that your agency or service reports your
separation promptly.
The first year in which you are separated from service and have reached your applicable age or older is
called your first distribution calendar year
. If you do not receive enough money from the traditional
balance in your TSP account to meet your RMD amount during your first distribution calendar year, we
are required to disburse your first RMD to you by April 1 of the following year. That date is called your
required beginning date. Use Table 1 to find your applicable age and your required beginning date.
Table 1. RMD applicable age and required beginning date finder
Participant’s
Date of Birth
Applicable Age
Employment Status
as of 12/31/2022
Required Beginning Date
Before January 1, 1951 Has already passed
Separated Has already passed
Active April 1 of the year aer separation
January 1, 1951 –
December 31, 1951
73
Separated April 1, 2025
Active April 1 of the year aer separation
January 1, 1952 –
December 31, 1959
73
Separated
April 1 of the year aer participant is
both separated and at least 73
Active
Aer December 31, 1959 75
Separated
April 1 of the year aer participant is
both separated and at least 75
Active
6 These calculations only include traditional money beginning with 2024 RMDs. If your first distribution calendar year was 2023, your RMD
calculation for 2023 includes your entire TSP account balance—both Roth and traditional—even if you take your 2023 RMD in 2024.
10
Note that the deadline for receiving the RMD for your first distribution calendar year is not until April of
your second distribution calendar year. The extended April deadline applies only to the first year. Aer
that, the deadline for receiving RMDs is December 31 each year. That means that during your second
distribution calendar year, you may have two RMDs, one by April 1 for the first distribution calendar year
and one by December 31 for the second. In the years that follow the second distribution calendar year,
you’ll have just one RMD, due December 31.
Ensuring You Receive Your RMD
You will fully or partly satisfy your RMD with any distributions from your traditional balance you choose
to take during the calendar year. If you don’t take any distributions from your traditional balance or
if distributions from your traditional balance fall short of the required amount, we will automatically
send you the amount that’s still required. This section explains the dierent rules that apply in your first
distribution calendar year and in your second and subsequent distribution calendar years. It also shows
how dierent withdrawal methods may aect how you satisfy your RMD. The scenarios in this section
assume that the described transaction is the first distribution you’ve taken in the year and that you have
not taken a total distribution. Total distributions automatically satisfy the RMD. See the TSP booklet
Distributions on tsp.gov for more information about withdrawal methods.
You must keep your mailing address and other information up to date
in My Account. If we’re aware that the address we have for you is incorrect,
we will not send you an RMD check. You may also consider adding direct
deposit information in My Account to receive TSP distributions, including
any automatic RMD payments. It’s safe and easy to add your bank
information in My Account, and receiving your money electronically is
faster than waiting for a check in the mail.
What Happens During Your First Distribution Calendar Year
•
If you receive installments, your installments from your traditional balance will count toward
satisfying
your RMD. If your installments, combined with any subsequent distributions you
might make, do not meet the required amount from your traditional balance, we will give you a
supplemental payment from your traditional balance in March of the following year to satisfy your
RMD before the April 1 deadline.
•
If you take a partial distribution, your RMD will be satisfied if the withdrawal amount from
your traditional balance is at least the amount of your RMD or reduced if the amount from
your traditional balance is less than your RMD. If your partial distribution, combined with any
subsequent distributions you might make, does not meet the required amount from your
traditional balance, we will give you a supplemental payment from your traditional balance in
March
of the following year to satisfy your RMD before the April 1 deadline.
•
If you purchase an annuity with money from your traditional balance, we will send you a separate
check for your full RMD amount before processing the annuity purchase.
11
What Happens During Your Second and Subsequent Distribution Calendar
Years
Because the deadline for your first distribution year is April 1 of your second distribution year, we will
continue to follow the rules just explained for the first two months of the second year unless the first
year’s RMD has been satisfied. Your distributions taken in the second year won’t start counting toward
your second year’s RMD until your first year’s RMD is satisfied. If your RMD is still not satisfied by mid-
March, we will send you what remains of your first year’s RMD. Aer that, your distributions from your
traditional balance will count toward your second year’s RMD using the same rules described for the first
distribution calendar year with two important exceptions:
•
December 31 deadline. Aer the first year, the deadline for a given year’s RMD is December 31 of
that same year. So if you haven’t satisfied your RMD by December, we will send you the necessary
amount from your traditional balance then.
•
Treatment of annuity purchases. The rule about sending you a check before processing any
withdrawal that includes an annuity purchase no longer applies aer you’ve satisfied your first
year’s RMD. If you purchase an annuity in a later year, your annuity purchase will satisfy a portion
of your RMD for that year in this way: the percentage of your traditional balance that you use to
purchase the annuity is the same percentage of your RMD that the purchase will satisfy. In other
words, if you choose to purchase an annuity with 50% of your traditional balance, then 50% of your
RMD amount will be satisfied.
The same rules apply for the years that follow except that distributions taken from your traditional
balance in all months of a year count toward that year’s RMD.
RMDs When You’re Receiving Installment Payments
If you receive installment payments that include money from your Roth balance, the Roth portion of
your installment payments won’t count toward satisfying your RMD. This means that your installment
payments alone may not satisfy your RMD, and you may need to receive an additional distribution from
your traditional balance. If that’s the case, you won’t need to take any action to request the additional
distribution because we will automatically send you a payment to satisfy the remaining amount of your
RMD before the deadline.
If you receive installments based on life expectancy, remember that we calculate the installment
payment amount based on your age and your entire account balance. Because RMD calculations include
only your traditional balance, if you have a Roth balance and receive installment payments based on life
expectancy that come from your traditional balance first, you may end up receiving more than your RMD
amount during the calendar year.
RMDs May Not Be Rolled Over
RMDs cannot be rolled over to an IRA or eligible employer plan. If you choose to roll over all or part of a
distribution in a year in which you have an RMD, we are required to make sure you satisfy the RMD before
any rollover takes place. We must do this beginning with your first requested rollover of the year, whether
or not you intend to satisfy the RMD later in the year.
12
When you request an eligible rollover distribution in a year in which you’re subject to an RMD, the RMD
amount will be removed from any portion of the distribution that comes from your traditional balance
before you’re allowed to request a rollover. For example, if you take a partial or total distribution of
$100,000 from your traditional balance and have an RMD of $10,000, you will only be able to roll over
$90,000. We will send the $10,000, minus any tax withholding, directly to you. If you’ve elected to receive
installments of a fixed dollar amount expected to last less than 10 years, the option to roll over any
traditional money will not be available to you until the RMD has been satisfied.
Tax Withholding from RMDs
With one exception explained in the next paragraph, RMDs are in the IRS category of non-periodic
installments. We must withhold 10% for federal income tax unless we receive other instructions from you.
You can instruct us to withhold a dierent percentage between 0% and 100% by contacting us using one
of the ThriLine options listed at the end of this booklet.
Exception: There is one situation in which we would not treat your RMD as a non-periodic payment:
if a portion of an installment is used to satisfy your RMD and that installment is categorized as a
periodic payment (payments expected to last 10 years or more or based on life expectancy), then the
whole payment, including the RMD portion, is considered a periodic payment. We’ll follow the same
withholding rules for “Installments Expected to Last 10 Years or More or Based on Life Expectancy” listed
on page 7.
RMDs from Beneficiary Participant Accounts
Beneficiary participants (see “Death Benefits” on page 15) are also required to take RMDs. If you’re a
beneficiary participant, your RMD calculation will include your total account balance (traditional and
Roth). Any distributions you take while subject to RMDs will count toward satisfying the requirement. If
the total amount of your distributions doesn’t satisfy the RMD, we’ll issue a supplemental payment for
the remaining amount before the deadline each year. If we automatically send you a supplemental RMD
payment and you have both traditional and Roth balances in your beneficiary participant account, the
automatic RMD payment will be taken proportionally from each balance.
For beneficiary participant accounts, we calculate any RMDs to be paid in the year of the participant’s
death using the deceased participant’s age (as of the participant’s birthday in the year of death) and prior
year-end account balance and the IRS Uniform Lifetime Table. (See page 20.) In the years following the
deceased participant’s death, we calculate the annual amount of your RMD using your age, your prior
year-end account balance, and the IRS Single Life Expectancy Table.
7
(See page 21.)
Note: If your TSP account record has incorrect dates for your spouse’s birth or death, you may not
receive a payment that satisfies the RMD by the applicable deadline in your spouse’s year of death. If this
happens, you may be subject to an excise tax of 25% on the amount that was not paid to you on time.
(The excise tax is reduced to 10% if you meet the conditions of section 4974(e) of the Internal Revenue
7 If you have more than one TSP account, the RMD is calculated separately for each account.
13
Code.) This could also happen in the years following your spouse’s year of death if your TSP account
has an incorrect date of birth for you or your spouse. To avoid this excise tax, you must be sure that the
information in your TSP record is correct. Log in to My Account on tsp.gov to check this information. Use
one of the ThriLine options listed at the end of this booklet to make corrections.
The date on which you as the beneficiary must begin receiving RMDs depends on whether your spouse
died before or on/aer his or her required beginning date. See Table 1 on page 9 to find your spouse’s
required beginning date. The table also shows your spouse’s “applicable age,” which you’ll need to know
if your spouse dies before the required beginning date.
Participant’s Date of Death Is Before Required Beginning Date
Table 2 shows the three possible scenarios in this category and the deadline by which you, as the
beneficiary participant, must begin receiving RMDs.
Table 2. Beneficiary RMD deadlines when spouse dies before required beginning date
If, at the time of death, you must begin receiving RMDs by
your spouse would not have reached the applicable age
before the end of the year,
December 31 of the year your spouse would have reached the
applicable age.
your spouse reached the applicable age, or would
have reached it before April 1 of the following year,
and had already separated from federal service,
December 31 of the year following the year of your spouse’s
death. Note: It makes no dierence if your spouse had already
satisfied the RMD for the year he or she reached the applicable
age prior to the required beginning date.
your spouse had reached the applicable age and had not
separated from federal service,
December 31 of the year following the year of your spouse’s
death.
In the scenarios described in Table 2, you must continue to receive distributions by December 31 of each
subsequent year. We will base all of your RMDs on your age, not your spouse’s.
Participant’s Date of Death Is On or Aer Required Beginning Date
If your spouse dies on or aer the required beginning date, the deadline for your first RMD as a
beneficiary participant depends on whether your spouse satisfied the RMD for the year of death:
•
If the RMD had not been met, then you still need to receive the RMD by December 31 of the year of
death. In this case, it’s calculated based on your spouse’s age, as described on page 12.
•
If the RMD had been met, then your first RMD is due December 31 of the year following the year of
your spouse’s death, and it’s calculated according to the description that follows.
In both situations, you will need to receive an RMD by December 31 of each subsequent year.
14
If your spouse dies during the second distribution calendar year (see page 11), consider the following:
•
If your spouse dies on or aer April 1 of the second distribution calendar year, it’s most likely that
your spouse already received the RMD amount for the previous year. (Because the deadline for
the previous year’s RMD would have been April 1, we would have automatically distributed any
amount necessary to satisfy the RMD by that deadline.) But that has no eect on whether you have
to receive the RMD for the current year. As long as the RMD for the second distribution calendar
year has not been met, you are required to receive it by December 31 of that year.
•
If your spouse dies before April 1 of the second distribution calendar year, that counts as before the
required beginning date. See the second row of Table 2 on page 13.
Calculating the RMD Amount Aer the Year of the Participant’s Death
If your spouse dies on or aer the required beginning date, we calculate your RMD amount each year aer
the year of death using the IRS Single Life Expectancy Table on page 21 and applying the greater of two
numbers:
•
your life expectancy
•
the life expectancy of your spouse in the year of death minus one for each year aer the year of
death
Because the RMD is based on the prior year account balance divided by the life expectancy, using the
greater life expectancy results in a lower RMD amount. This means you can keep more money in your
beneficiary participant account for longer.
Generally, if you are younger than your spouse in the year of death, then your RMD amount will be based
on your age and life expectancy each year.
If you are the same age as or older than your spouse, then your RMD amount may be based on your
spouse’s age in the year of death for several years.
Example: Table 3 on page 15 shows how to determine the greater life expectancy used to calculate the
beneficiary participant RMD in the following example: The deceased participant was born on August 31,
1948, and dies on October 1, 2023, at the age of 75. The participant already received the RMD for 2023.
This means that the spouse beneficiary must receive an RMD for 2024 by December 31, 2024. The RMD will
be calculated based on the total account balance on December 31, 2023, and the greater life expectancy
of the spouse beneficiary and the deceased participant (in the year of death minus one, since 2024 is one
year aer the year of death).
The spouse beneficiary was born on June 1, 1943, and turns age 81 in 2024. According to the IRS Single
Life Expectancy Table, the deceased participant’s life expectancy would have been 14.8 in 2023. For the
2024 RMD calculation, we subtract 1 from 14.8 to compare the resulting 13.8 to the life expectancy of
the spouse beneficiary in 2024, which is 10.5 for age 81. In 2024, the RMD calculation is based on the
deceased participant’s life expectancy because 13.8 is greater than 10.5.
This comparison will happen each year to calculate the RMD. As Table 3 shows, only in 2032 will the RMD
calculation start being based on the spouse beneficiary’s life expectancy.
15
Table 3. Example life expectancy comparison for calculating beneficiary participant RMD
Year
Deceased Participant
(born in 1948)
Spouse Beneficiary
(born in 1943)
2023 (year of participant’s death) 14.8 (at age 75) 11.2 (at age 80)
2024 (year of first beneficiary RMD) 13.8 10.5 (at age 81)
2025 12.8 9.9 (at age 82)
2026 11.8 9.3 (at age 83)
2027 10.8 8.7 (at age 84)
2028 9.8 8.1 (at age 85)
2029 8.8 7.6 (at age 86)
2030 7.8 7.1 (at age 87)
2031 6.8 6.6 (at age 88)
2032 5.8 6.1 (at age 89)
2033
4.8 5.7 (at age 90)
2034 3.8 5.3 (at age 91)
Death Benefits
When a civilian or uniformed services participant dies and his or her spouse is a beneficiary of the
account, the account—or portion of the account if there are other beneficiaries—is used to create a TSP
beneficiary participant account
. The spouse beneficiary may keep this account and continue saving
and making investment decisions with the TSP. Taxes continue to be deferred on any taxable portion of
the money that creates the beneficiary participant account.
When a beneficiary of a civilian or uniformed services TSP account is a trust or a person who is not the
participant’s spouse, the designated portion of the deceased participant’s account is temporarily placed
in a separate account. Beneficiaries in this category may request payment once the temporary account
is established. Payment is made automatically in a lump-sum total distribution aer 90 days. The IRS
categorizes this as an eligible rollover distribution, but it can only be rolled over to an inherited IRA and
only in a direct rollover. We are required to withhold 20% of the taxable portion of the distribution not
rolled over for federal income taxes. The beneficiary may instruct us to withhold a percentage that’s
greater than 20% but may not have withholding waived or decreased.
When a beneficiary of a civilian or uniformed services TSP account is an estate, corporation, or other
legal entity, the same procedures apply, but the IRS considers the distribution a non-periodic payment.
The beneficiary may not roll over the distribution. We withhold 10% of the taxable portion for federal
taxes in this case. The beneficiary may instruct us to withhold a dierent percentage between 0% and
100%. These are also the rules that apply when the holder of a beneficiary participant account dies. All
beneficiaries of beneficiary participant accounts are treated the same way, including spouses in cases
where the beneficiary participant has remarried.
16
Note: In any of the scenarios just described, when the amount due to a beneficiary is less than $200,
payment is made to the beneficiary immediately. Only indirect rollovers are allowed.
Qualifying Orders
Qualifying orders are retirement benefits court orders, legal processes (including child support orders,
IRS tax levies, and restitution orders), and child abuse orders that meet the requirements set forth in 5
C.F.R. Part 1653.
8
Payments made under qualifying orders are disbursed pro rata (i.e., proportionally)
from any traditional and Roth balances in the participant’s TSP account. Court orders, legal processes,
and child abuse orders that designate a specific source (traditional, Roth, or tax-exempt) from which
payment should be made are not qualifying and will not be processed.
The taxable portion of any payment made to a current or former spouse is taxable income to the recipient
of the payment. The taxable portion of any payment made to someone else, such as for child support,
is taxable income to the TSP participant who holds the account from which the payment was made. We
use the TSP participant’s age (or date of death if applicable) and the date of the participant’s first Roth
contribution to determine whether the earnings in the participant’s Roth balance are qualified and not
subject to income tax to either the recipient or the participant. (See “qualified earnings” in the glossary at
the end of this booklet.)
We must withhold for federal income tax from taxable payments we make unless the person responsible
for paying taxes requests that there be no withholding and is eligible to do so. The federal income tax
withholding and rollover rules that apply to a payment made under a qualifying order are determined
based on the recipient of the payment.
The rules for tax treatment of payments resulting from qualifying orders are dierent depending on the
type of payment, the recipient of the payment, and the type of TSP account the payment comes from.
See the table on page 19 for the withholding and rollover rules for each scenario.
8 Retirement benefits court orders are issued pursuant to court action for a divorce, annulment, or legal separation. They award an
amount to be paid from a participant’s (or beneficiary participant’s) TSP account to a current (including separated) spouse or former
spouse or a dependent. This includes alimony and property settlement awards. Legal processes are issued pursuant to state law and
garnish a participant’s account to enforce a current child support or alimony obligation. They may also be issued for the enforcement of
IRS tax levies or restitution orders pursuant to the Mandatory Victims Restitution Act (MVRA). Child abuse orders are issued to garnish
a participant’s account to satisfy a judgment related to the abuse of a child.
17
TSP Payments to Nonresident Aliens
Special rules govern the tax treatment of TSP payments to nonresident aliens. A nonresident alien is
an individual who is neither a U.S. citizen nor a resident of the United States.
9
What follows is a brief
summary of the rules for nonresident aliens receiving money from TSP accounts. See IRS Publication 721,
Tax Guide to U.S. Civil Service Retirement Benefits for more detailed information.
If a nonresident alien never worked for the U.S. government inside the United States, then he or she is
generally not liable for U.S. federal income taxes on distributions and withdrawals from the TSP.
Conversely, a nonresident alien whose U.S. government work was only within the United States is liable
for U.S. income taxes on all taxable portions of TSP payments.
Nonresident aliens who worked for the U.S. government both inside and outside the United States are
liable for payments received from their TSP accounts but in proportion to how much of their basic pay
was earned inside the United States. For example, if a nonresident alien earned $100,000 in basic pay
over a career, and $40,000 of it was earned within the United States, then that participant would be liable
for taxes on 40% of the taxable portion of all TSP payments received.
Tax Withholding on Payments to Nonresident Aliens
With three exceptions, TSP payments made to any civilian participant who has a permanent address
outside the United States, will be subject to 30% withholding.
Exceptions:
•
The participant certifies that he or she is a U.S. citizen. Regular tax withholding applies.
•
The participant is not a U.S. citizen but submits IRS form W-8BEN accurately indicating that his or
her country of residence qualifies for a reduced federal tax treaty rate.
•
The participant is a nonresident alien but certifies that he or she never worked for the U.S.
government inside the United States.
9
In such cases, the payment is not subject to U.S. income
tax and no money will be withheld. But the recipient must contact the TSP to obtain the
appropriate form to make this certification and must submit the form prior to requesting
payment.
9 The “United States” includes the 50 states, the District of Columbia, and certain U.S. possessions and territories detailed in IRS
Publication 570, Tax Guide for Individuals With Income from U.S. Possessions.
18
Beneficiaries and Court-ordered Payees
The following rules apply regarding beneficiaries and court-ordered payees when one or both parties
involved is a nonresident alien:
•
A U.S. citizen or resident alien beneficiary or court-ordered payee of any participant, even a
nonresident alien, is liable for U.S. income tax.
•
A nonresident alien beneficiary or court-ordered payee of a U.S. citizen participant or a resident
alien participant is liable for U.S. income tax.
•
A nonresident alien beneficiary or court-ordered payee of a nonresident alien participant is liable
for U.S. income tax if the participant worked for the U.S. government in the United States.
•
A nonresident alien beneficiary or court-ordered payee of a nonresident alien participant is not
liable for U.S. income tax if the participant never worked for the U.S. government in the United
States, but must submit the TSP-provided form certifying this before payment is processed
to avoid 30% withholding
. In a case where part of the work was done in the United States and
part outside the United States, the amount of the payment to be included in gross income will be
calculated proportionally. See IRS Publication 721, U.S. Guide to Civil Service Retirement Benefits.
Special Tax Treatment if You Were Born
Before January 2, 1936
If you were born before January 2, 1936, and you receive your entire account in a lump-sum distribution,
you can make a one-time election to calculate the amount of the tax on the distribution by using the
10-year tax option and 1986 tax rates. The 10-year tax option oen reduces the taxes that you owe. To
learn more, see IRS Publication 575, Pension and Annuity Income. The 10-year tax option does not apply
to beneficiary participant accounts.
19
Tax Treatment for TSP Payments
Type of TSP Payment
Type of
Payment for
IRS Purposes
May I Roll
Over the
Payment?
What Is the
Withholding
Rate?
1
May I Have
a Higher
Percentage
Withheld?
May I Have
a Lower
Percentage
Withheld?
May I
Choose to
Have 0%
Withheld?
Automatic enrollment refund
2
Non-periodic
payment
No 10%
Yes
Yes
Yes
Total or partial distribution by
a separated or beneficiary
participant
Eligible rollover
distribution
Yes 20% Yes
No No
Installments for less than 10
years (fixed dollar amount)
3
Eligible rollover
distribution
Yes 20% Yes No No
Installments for 10 years or
more (fixed dollar amount)
4
Periodic payment No As if single with
0 exemptions
5
Yes Yes Yes
Installments based on life
expectancy
Periodic payment No As if single with
0 exemptions
5
Yes Yes Yes
Required minimum distributions
(RMDs). See exception on page 12.
Non-periodic
payment
No 10% Yes Yes Yes
Age 59 in-service withdrawal Eligible rollover
distribution
Yes 20% Yes No No
Financial hardship in-service
withdrawal
Non-periodic
payment
No 10% Yes Yes Yes
Automatic force-out (less
than $200)
Eligible rollover
distribution
Indirect rollover
only
20% Not
applicable
Not
applicable
Not
applicable
Foreclosed loan
(post-separation)
Eligible rollover
distribution
Indirect rollover
only (using
personal funds)
Not applicable—
money already paid
Not
applicable
Not
applicable
Not
applicable
Taxed loan (while still
employed)
Non-periodic
payment
No Not applicable—
money already paid
Not
applicable
Not
applicable
Not
applicable
Court order payment to a
current or former spouse
6
Eligible rollover
distribution
Yes 20% Yes
No
No
Court order payment (not to
current or former spouse)
Non-periodic
payment
No 10% Yes Yes
Yes
IRS tax levy; Restitution order
(MVRA)
Eligible rollover
distribution
No 20% No No No
Death benefit
7
from a beneficiary
participant account
Non-periodic
payment
No 10% Yes Yes Yes
Death benefit to a person or
trust from a civilian or
uniformed services account
8
Eligible rollover
distribution
Only to an
“inherited” IRA
20% Yes No No
Annuity purchase Taking a TSP distribution to purchase an annuity is not a taxable transaction. Our annuity vendor will report annuity
payments for tax purposes and provide information about withholding options.
1 Withholding only applies to the taxable portion of the payment.
2 Withholding rules that apply to refunds of automatic enrollment contributions paid out as post-separation distributions are based on the option chosen
when you request the distribution.
If the payment is satisfying the RMD amount, it is treated as a non-periodic payment. See the “Required minimum distribution payments” section of this table.
4 Payments are treated as periodic even if they are satisfying the IRS RMD amount.
5 Installments initiated before 2023 continue to have withholding as if married with three dependents.
6 When these payments are made from a beneficiary participant account, they follow the same rules as the “Death benefit from a beneficiary participant account”
section of this table.
7 Remember that the term “death benefit” does not apply to spouse beneficiaries of civilian or uniformed services accounts. See “Death Benefits” on page 15.
8 When these payments are made to an estate, corporation, or other legal entity, they follow the same rules as the “Death benefit from a beneficiary participant
account” section of this table.
20
Uniform Lifetime Table for Calculating Minimum Distributions*
Age Distribution
Period
Age Distribution
Period
Age Distribution
Period
72
27
.
4
92
10
.
8
112
3
.
3
73
26
.
5
93
10
.
1
113
3
.
1
74
25
.
5
94
9
.
5
114
3
.
0
75
24
.
6
95
8
.
9
115
2
.
9
76
23
.
7 96
8
.
4
116
2
.
8
77
22
.
9
97
7
.
8
117
2
.
7
78
22
.
0 98
7
.
3
118
2
.
5
79
21
.
1 99
6
.
8
119
2
.
3
80
20
.
2
100
6
.
4
120+
2
.
0
81
19
.
4
101
6
.
0
82
18
.
5
102
5
.
6
83
17
.
7
103
5
.
2
84
16
.
8
104
4
.
9
85
16
.
0
105
4
.
6
86
15
.
2
106
4
.
3
87
14
.
4
107
4
.
1
88
13
.
7
108
3
.
9
89
12
.
9
109
3
.
7
90
12
.
2
110
3
.
5
91
11
.
5
111
3
.
4
*
A r
equired minimum distribution (RMD) is calculated as illustrated in the following example: The participant reaches age 75 in 2022
.
As of December 31, 2021 (the last day of the calendar year immediately preceding the RMD year), the value of the participant’s TSP
account is $246,000
.
Based on the table above, the expected distribution period (in years) for a 75-year-old individual is 24
.
6, so the
RMD is $246,000 divided by 24
.
6
.
Through this calculation, the participant determines that the 2022 RMD is $10,000.
21
Single Life Table for Calculating Minimum Distributions*
Age
Life
Expectancy
Age
Life
Expectancy
Age
Life
Expectancy
Age
Life
Expectancy
0 84.6 31 54.4 62 25.4 93 4.6
1 83.7 32 53.4 63 24.5 94 4.3
2 82.8 33 52.5 64 23.7 95 4.0
3 81.8 34 51.5 65 22.9 96 3.7
4 80.8 35 50.5 66 22.0 97 3.4
5 79.8 36 49.6 67 21.2 98 3.2
6 78.8 37 48.6 68 20.4 99 3.0
7 77.9 38 47.7 69 19.6 100 2.8
8 76.9 39 46.7 70 18.8 101 2.6
9 75.9 40 45.7 71 18.0 102 2.5
10 74.9 41 44.8 72 17.2 103 2.3
11 73.9 42 43.8 73 16.4 104 2.2
12 72.9 43 42.9 74 15.6 105 2.1
13 71.9 44 41.9 75 14.8 106 2.1
14 70.9 45 41.0 76 14.1 107 2.1
15 69.9 46 40.0 77 13.3 108 2.0
16 69.0 47 39.0 78 12.6 109 2.0
17 68.0 48 38.1 79 11.9 110 2.0
18 67.0 49 37.1 80 11.2 111 2.0
19 66.0 50 36.2 81 10.5 112 2.0
20 65.0 51 35.3 82 9.9 113 1.9
21 64.1 52 34.3 83 9.3 114 1.9
22 63.1 53 33.4 84 8.7 115 1.8
23 62.1 54 32.5 85 8.1 116 1.8
24 61.1 55 31.6 86 7.6 117 1.6
25 60.2 56 30.6 87 7.1 118 1.4
26 59.2 57 29.8 88 6.6 119 1.1
27 58.2 58 28.9 89 6.1 120+ 1.0
28 57.3 59 28.0 90 5.7
29 56.3 60 27.1 91 5.3
30 55.3 61 26.2 92 4.9
* A required minimum distribution (RMD) is calculated as illustrated in the following example: The deceased participant was born
on October 31, 1957, and dies on December 1, 2015, at the age of 58. The beneficiary participant must begin receiving annual RMDs
by December 31, 2030 (the end of the year in which the participant would have reached age 73). As of December 31, 2029 (the last day
of the calendar year immediately preceding the RMD year) the beneficiary participant account balance is $220,000. The beneficiary
participant is age 66 in 2029. Based on the table above, the life expectancy (in years) for a 66-year-old individual is 22, so the RMD is
$220,000 divided by 22. Through this calculation, the beneficiary participant determines that the 2029 RMD is $10,000.
23
Glossary of Terms
Death benefit—A payment from a TSP account made to a non-spouse beneficiary. It does not include the
transfer of money from a deceased participant’s TSP account to create a spouse’s beneficiary participant
account.
Distribution—A payment made to a separated or beneficiary participant from a TSP account.
Earnings—The money that contributions (yours and your agency’s or service’s if applicable) have earned
while in your TSP account. It’s the dierence between your total account balance and the amount of your
total contributions.
Eligible employer plan—A plan qualified under Internal Revenue Code (IRC) § 401(a), including a 401(k)
plan, profit-sharing plan, defined benefit plan, stock bonus plan, and money purchase plan; a 403(a)
annuity plan; a 403(b) tax-sheltered annuity; and an eligible 457(b) plan maintained by a governmental
employer.
Eligible rollover distribution—See “IRS payment categories.”
IRS payment categories—All payments from TSP accounts fall into one of three categories for IRS
purposes:
– Eligible rollover distributions. Generally distributions or withdrawals that the IRS allows to be
rolled over into another retirement plan or IRA. See the table on page 19 for exceptions.
– Periodic payments. A series of substantially equal payments from your account over the course of a
lifetime or a period of ten years or more.
– Non-periodic payments. Generally payments that do not meet the definition of periodic payments
but cannot be rolled over.
Non-periodic payments—See “IRS payment categories.”
Periodic payments—See “IRS payment categories.”
Pro rata—In proportion to the makeup of your account. For example, if you take a withdrawal or
distribution from your account and your account is 60% in the C Fund and 40% in the G Fund, the money
will be taken 60% from the C Fund and 40% from the G Fund.
Qualified earnings—Earnings on Roth contributions that are eligible to be paid out tax-free at withdrawal.
Earnings are considered qualified as long as the following two requirements are met: (1) it has been 5
years since January 1 of the calendar year the participant made the first Roth TSP contribution and (2)
the participant is at least age 59½, permanently disabled,
10
or deceased.
10 We cannot certify to the IRS that you meet the Internal Revenue Code’s definition of a disability when your taxes are reported. Therefore,
you must provide the justification to the IRS when you file your taxes.
24
Rollover—The act of moving money from an IRA or eligible employer plan to your TSP account, or
moving it in the other direction. When you do this directly between the two accounts, it’s called a direct
rollover. An indirect rollover is first sent to you before you deposit it into another retirement account,
generally within 60 days of receiving it. (See page 4 for more information.)
Roth balance—The portion of a TSP account balance that is made up of employee contributions
designated as Roth when you (or, if you’re a beneficiary participant, your deceased spouse) made the
contribution election, and the earnings on those contributions. Earnings on all Roth contributions are
tax-free provided certain Internal Revenue Service (IRS) rules are met. (See also “qualified earnings.”)
Traditional balance—The portion of a TSP account balance that is made up of all employee contributions
designated as traditional when you (or, if you’re a beneficiary participant, your deceased spouse) made
the contribution election and the earnings on those contributions. For FERS and BRS participants, your
traditional balance also includes your Agency/Service Automatic (1%) Contributions, as well as any
Agency/Service Matching Contributions made to your account. Earnings on agency/service contributions
are also a part of your traditional balance.
Withdrawal—Money you take from your account before you’re separated from federal civilian
employment or the uniformed services. There are two types: those you’re allowed to take because of a
financial hardship and those you can take because you’ve reached the age of 59.
25
ThriLine Service Center
Phone:
1-877-968-3778 (United States, toll-free)
+ 1-404-233-4400 (Outside the United States, not toll-free)
7 a.m.–9 p.m. eastern time, Monday through Friday
Fax:
1-276-926-8948
Mail:
ThriLine Service Center
C/O Broadridge Processing
PO Box 1600
Newark, NJ 07101-1600
TSPBK26 (1/2024)
PREVIOUS EDITIONS OBSOLETE
