Retirement Planning Retirement PlanningRetirement Planning
Advice on how to prepare for life after government.

Required Payouts


Last week’s column, Understanding Your TSP Options, left at least one commenter wanting to know more about the issue of required minimum distributions from the Thrift Savings Plan:

I would like to hear more about payout options because I don't think it's wise to leave money in the TSP past age 70 due to the withdrawal limitations and risk of an RMD (required minimum distribution) penalty. Can anyone convince me otherwise?

The Internal Revenue Code requires that you receive a portion of your TSP account beginning in the calendar year when your age reaches 70½ and you are separated from service. The portion you’re required to take is called a required minimum distribution, or RMD.

Your entire TSP account is subject to the required minimum distributions. When you have traditional and Roth balances in your account, any withdrawals will be paid proportionally from each balance. Likewise, if you have an account that has both taxable and tax-exempt contributions, your distribution will be paid proportionally from each.

The TSP calculates RMDs based on your account balance and your age, using guidelines set by the IRS. The RMD computation will vary depending on the withdrawal option you’ve chosen, ranging from a series of monthly payments based on a life expectancy computation to a set dollar amount each month. There is also a lifetime annuity option and the choice of a partial or full lump sum payment. For more information, see the TSP publication Important Tax Information About Your TSP Withdrawal and Required Minimum Distributions.

Active federal employees can continue to contribute to the TSP and are not subject to RMD rules until after they retire. So if you’re still working past age 70 ½, you can continue to leave your money in the TSP.

Once you’re retired and over 70 ½, the TSP will help you avoid the penalty for not taking the correct amount of distributions. For example, if you choose to receive your TSP balance as a series of monthly payments of $200 per month, for example, and the RMD for that year based on your account balance and your age is $5,000, then the TSP will send you a lump sum payment of $2,600 at the end of the year to meet the $5,000 withdrawal requirement for the year.

If you choose the withdrawal option that provides a series of monthly payments based on life expectancy, the TSP will automatically compute your payout based on the RMD amount when you turn 70.

Finally, the TSP notifies separated employees who will turn 70 the following year to let them know that they need to make a withdrawal election from their TSP to avoid the penalty for not meeting the RMD.

Your RMD payment cannot be transferred or rolled over into another Individual Retirement Account or employer plan. If you withdraw your account in a single payment or monthly payments in a year during which the RMD applies, before transferring any money the TSP will calculate your RMD amount and mail it directly to you (or, if applicable, to the savings or checking account designated to receive your direct deposits).

Here’s more information from the TSP regarding RMD payments.


Tammy Flanagan has spent 30 years helping federal employees take charge of their retirement by understanding their benefits. She runs her own consulting business at and provides individual counseling as well as online training for the National Active and Retired Federal Employees Association, Plan Your Federal Retirement as well as the Federal Long Term Care insurance Program. She also serves as the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Federal News Radio on Mondays at 10 a.m. ET on WFED AM 1500 in the Washington-metro area. Archived shows are available on

Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Sponsored by G Suite

    Cross-Agency Teamwork, Anytime and Anywhere

    Dan McCrae, director of IT service delivery division, National Oceanic and Atmospheric Administration (NOAA)

  • Data-Centric Security vs. Database-Level Security

    Database-level encryption had its origins in the 1990s and early 2000s in response to very basic risks which largely revolved around the theft of servers, backup tapes and other physical-layer assets. As noted in Verizon’s 2014, Data Breach Investigations Report (DBIR)1, threats today are far more advanced and dangerous.

  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.


When you download a report, your information may be shared with the underwriters of that document.