Separation from government service


Q. I am 38 years old with nine years of federal service and approximately $100,000 in my TSP. I am considering leaving the federal government within the next year and I am not exactly clear on what my options are.

I understand that I can either leave the money in the TSP or withdraw it, but my wife and I intend to move back home to southeast Virginia. I have been considering taking approximately $20,000 and putting it toward a down payment on a house and putting the balance in a Vanguard IRA. I don’t know if this is this feasible or utterly illogical and was hoping you might have some useful insight.

A. Using some of your savings toward the purchase of a home is a reasonable thing to consider. After you retire, you’ll be allowed to withdraw money from your TSP account, but you’ll pay an early withdrawal penalty unless you qualify for an exception. An IRA gives you a limited exception for a first-time home purchase, while the TSP does not, so you may want to roll money from your TSP account to an IRA before taking the withdrawal for the purchase. You should seek guidance from a qualified tax adviser before going down this path, however.


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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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