Pay & Benefits

Feds have TSP withdrawal options

Federal Retirement Thrift Investment Board\'s Tom Trabucco explains what federal employees need to know before they withdraw from their Thrift Savings Plan.

Federal News Network Staff

January 18, 2011 3:24 pm

1 min read

wfedstaff | June 3, 2015 7:54 pm

Download audio

You’re preparing to leave the federal workforce — so what’s the most effective way to withdraw money from your Thrift Savings Plan?

Tom Trabucco, director of external affairs at the Federal Retirement Thrift Investment Board, told the DorobekINSIDER there are three options for feds leaving public service:

‘Take the whole pile’
Trabucco said retired federal employees can take their entire TSP investment and transfer it to an IRA or eligible plan without a tax penalty. Employees can also put their TSP funds in another type of investment, although most people don’t want to “take the tax hit,” he said.
Monthly payments
In terms of number of participants, the monthly payments are the most popular withdrawal option, Trabucco said.
Participants can choose any amount for their monthly payment down to $25, and they can change the amount once a year, he said.

This option offers the convenience of supplementing a basic annuity, Trabucco said.

Join us Apr. 25 at 1 p.m. EST for Federal News Network's StateRAMP Exchange where we'll explore how the StateRAMP program provides cyber assurances as state agencies continue their IT modernization journeys. | Register today!
Purchase an annuity
The FRTIB will purchase an annuity through Metropolitan Life Insurance. MetLife offers 16 different kinds of annuities, Trabucco said.
This option is not very popularly because interest rates are so low, “so annuity payments are not particularly large right now,” he said.