Changes

An employee also may make withdrawals against his/her balance.  These withdrawals are permanent reductions in the balance, and are subject to tax and early withdrawal penalties if applicable:

An employee also may make withdrawals against his/her balance.  These withdrawals are permanent reductions in the balance, and are subject to tax and early withdrawal penalties if applicable:

*Age-based withdrawal: an employee age 59 1/2 or older may take out one withdrawal during employment, but afterwards can only withdraw the total amount of his/her balance.<ref>Current legislation has this changing to four withdrawals per year, and removing the requirement to later remove the total balance at retirement if done, effective September 15, 2019.</ref>

*Age-based withdrawal: an employee age 59 1/2 or older may take out up to four withdrawals per year, but no sooner than every 30 days.

*Hardship withdrawal: an employee may take out a withdrawal for one of four reasons (negative cash flow, medical expenses, personal casualty loss, or legal expenses for a marital separation or divorce).  In addition to tax penalties and loss of potential future earnings, for the next six months an employee may not contribute or receive matching contributions (except for automatic ones),<ref>Effective September 15, 2019, the waiting period will no longer be in effect, and all persons who were subject to a waiting period will have it cease automatically.</ref> and afterwards is not automatically re-enrolled in TSP but must complete the paperwork to do so.

*Hardship withdrawal: an employee may take out a withdrawal for one of four reasons (negative cash flow, medical expenses, personal casualty loss, or legal expenses for a marital separation or divorce).

At retirement an employee can no longer take out loans nor can future contributions be made.  If the balance is under $200 it is automatically cashed out but can be rolled over into a different plan.<ref>Balances of under $5 are forfeited to the TSP, but employees can later reclaim them.</ref>  The employee can choose from any combination of the following options with regards to the balance:

At retirement an employee can no longer take out loans nor can future contributions be made.  If the balance is under $200 it is automatically cashed out but can be rolled over into a different plan.<ref>Balances of under $5 are forfeited to the TSP, but employees can later reclaim them.</ref>  The employee can choose from any combination of the following options with regards to the balance (however, upon reaching age 70 1/2 -- or upon retirement if later than that -- the employee must withdraw at least the minimum amount per IRS life expectancy tables; TSP will do this automatically if the employee does not):

*Leave the balance, or part of it, in the account (at age 70 1/2 the balance must either be withdrawn entirely or an annuity purchased, if neither is done the account is forfeited but can be reclaimed; however no earnings are paid during the abandonment period)<ref>Effective September 15, 2019, the requirement to close the account upon reaching age 70 1/2 will cease; however, required minimum distributions under IRS Code are still required.</ref>

*Leave the balance, or part of it, in the account

*Withdraw the balance, or part of it, either via rollover or cash out, or via monthly payments by purchasing an annuity or a specified amount (based on either an amount stipulated by the employee or using IRS life expectancy tables), but the amount can only be changed annually and the payments cannot be discontinued<ref>Current legislation has this changing to monthly, quarterly, or annual payments, and allowing the amount to be changed as frequently as desired including discontinuing them, effective September 15, 2019.</ref>

*Withdraw the balance, or part of it, either via rollover or cash out, purchase an annuity, or via periodic payments (based on either an amount stipulated by the employee -- which can be monthly, quarterly, or annually)

If a participant dies, then any unpaid balance is paid to the beneficiary(ies) designated.<ref>However, if the beneficiary(ies) caused the death of the account holder, they are not paid, but are treated as having predeceased the account holder.</ref>  If the participant did not designate any beneficiary(ies), then the "statutory order of precedence"<ref>The order of precedence is also used for payment of insurance benefits under the [[FEGLI]], unused portions of a [[Federal Employees Retirement System]] (FERS) annuity, and unpaid compensation.</ref> is used, as follows:

If a participant dies, then any unpaid balance is paid to the beneficiary(ies) designated.<ref>However, if the beneficiary(ies) caused the death of the account holder, they are not paid, but are treated as having predeceased the account holder.</ref>  If the participant did not designate any beneficiary(ies), then the "statutory order of precedence"<ref>The order of precedence is also used for payment of insurance benefits under the [[FEGLI]], unused portions of a [[Federal Employees Retirement System]] (FERS) annuity, and unpaid compensation.</ref> is used, as follows: