Partial withdrawal or loan?


Q. I am a 57-year-old retiree. I retired two years ago. Our daughter is getting married, and I would like to help her with $15,000 for the wedding coming up later this year. We have just over $100,000 in our Thrift Savings Plan account. We know we can only make a one-time withdrawal before we’re 59½ years of age without a penalty. So if we make a one-time partial withdrawal this year, we will not be able to make another withdrawal without penalty charges until after we are 59½. Would it be wiser to take out a $15,000 loan or make a partial TSP withdrawal? What other options should we consider?

A. The early withdrawal penalty and the one-time partial withdrawal restriction for TSP are two separate, unrelated things. TSP limits you to one partial withdrawal in your lifetime. After that, you may only take a full withdrawal, either as monthly payments or a lump-sum distribution. You may get around this by rolling over your TSP account to an Individual Retirement Account, but then you will be subject to the early withdrawal penalty before you reach age 59½ unless you meet one of the exceptions.

You might want to consider taking the partial withdrawal for the wedding and then starting a stream of monthly payments from your TSP to make sure you have enough to live on. You may change the amount of the monthly payments once each year in January.


About Author

Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to and view his blog at

Leave A Reply