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If you leave the federal government at age 55 or older, you can withdraw from your TSP without fear of a penaltyas long as you retire immediately.
Any withdrawal can seriously impact your ability to accumulate sufficient retirement funds. Its also possible that an early withdrawal, even for a financial hardship, can be subject to federal income tax, state income tax, and potentially a 10% early withdrawal penalty.
When you separate, you can leave your TSP there, and it will continue to continue earn gains based on the investment options that youve chosen. Or, you can transfer your TSP to your new employers 401k program. Or you can cash out your TSP and take a 10% penalty.
You can request to receive a total distribution of your entire TSP account balance if you want to take all of your money out of the TSP. Once processed, your TSP account balance will be $0, and youll no longer be able to move money into the TSP from eligible plans.
The TSP 75 form must be filed to request withdrawals the amount of which equals or exceeds $1,000, or to withdraw the entire vested account balance which may not reach $1,000. Only one age-based withdrawal may be requested during the time the TSP member is actively employed in Federal service or the uniformed services.
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Form TSP 70 is the form you need to fill up and submit when making a request for a full and immediate withdrawal of your entire vested Thrift Savings Plan (TSP) account balance. The TSP 70 form may be used only after you leave federal employment, and your employing agency confirms your separation from Federal service.
The TSP is required to withhold 20% from any TSP withdrawal or distribution, but that may not be that only amount of taxes owed. In many instances, the 20% required withholding is just a down payment on your ultimate tax bill for the withdrawal.

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