Age-based in-service withdrawal


Q. I am 62 years old and still a federal employee (for the next several years). I am thinking of withdrawing $100,000 of the $250,000 I have invested in Thrift Savings Plan. The purpose behind this withdrawal is to save paying federal taxes on this amount. That is, we will be selling an investment property that has $100,000 in “unrealized tax losses” and we should be able to offset the taxes owed on the $100,000 TSP withdrawal with the $100,000 loss from the sale of the property.

I am confused by a statement on the TSP website that says if you make an age-based withdrawal, “you will lose the opportunity to make a partial withdrawal from your account once you are separated from federal service.” What does that mean?

After the $100,000 withdrawal, we will still have $150,000 in the TSP account.  Does “losing the opportunity to make a partial withdrawal once separated from federal service” mean we can withdraw only the required yearly amount once I reach 70½  and can make no other withdrawals before that time?

Does it mean that we could not, in the future, withdraw another $75,000 if we needed/wanted it?

Does it mean we could withdraw only the whole amount ($150,000) left in the TSP account?

A. You are allowed only one partial withdrawal from your TSP account. After that, your only option is a full withdrawal, which can be in the form of monthly payments or a lump sum, or monthly payments ending in a lump sum. Before you make your age-based, in service withdrawal you should consult a CPA to make sure it will work. Your withdrawal will be considered ordinary income, and not capital gains, for tax purposes.


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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

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