Q. Are federal taxes taken out of the lump-sum payment for annual leave? And If I withdraw all of my Thrift Savings Plan upon retirement, will the tax be taken out before I receive the payment?
A. Mike: A lump-sum distribution from your TSP will be subject to 20 percent minimum federal tax withholding.
Reg: Yes, federal taxes will be taken out of your lump-sum payment for unused annual leave.