If you have a Thrift Savings Plan account and are approaching or already in retirement, Required Minimum Distributions are something you need to plan for. The IRS requires that you begin withdrawing a minimum amount from your TSP each year once you reach a certain age, and missing that deadline comes with a significant tax penalty. Here is what you need to know in plain terms.
What Is an RMD?
A Required Minimum Distribution is simply the minimum amount the IRS requires you to withdraw from your traditional TSP account each year once you reach your Required Beginning Date. The government does not let that money sit tax-deferred forever; at some point, they want their share.
When Do RMDs Start?
Your Required Beginning Date depends on when you were born:
- Born before 1951: RMDs began at age 72
- Born 1951 through 1959: RMDs begin at age 73
- Born 1960 or later: RMDs begin at age 75
Your first RMD must be taken by April 1st of the year following the year you reach the applicable age. Every RMD after the first must be taken by December 31st of that year. Most retirees choose to take their first RMD in the same year they reach the applicable age to avoid having two taxable distributions in a single calendar year.
One Important Change You May Have Missed
Prior to 2024, both your traditional TSP and your Roth TSP were included when calculating your annual RMD. That changed on January 1, 2024. Your Roth TSP is now excluded from the RMD calculation entirely; only your traditional TSP balance is used. If you have a significant Roth TSP balance, this is good news, as that money can continue growing tax-free without being forced out.
How Is the RMD Calculated?
The TSP calculates your RMD for you each year using your traditional TSP account balance as of December 31st of the prior year and an IRS life expectancy factor based on your age. You do not have to do the math yourself; the TSP will send you a notice each year showing your RMD amount.
What If You Do Not Withdraw Enough?
The TSP has a built-in safety net. If you have not withdrawn enough to satisfy your RMD by the deadline, the TSP will automatically withdraw the remaining amount from your traditional TSP account and send it to you. For the first distribution year, this automatic payment happens no later than March 15th of the following year. For all subsequent years, the TSP steps in by mid-December if your RMD has not been met.
This means you are unlikely to accidentally miss your RMD as long as your TSP account is active, but it also means money may come out of your account at a time you did not plan for, which is why having a deliberate withdrawal strategy matters.
What About a Spouse Beneficiary?
If you pass away and your spouse inherits your TSP account as a beneficiary TSP participant, they will also be subject to RMD rules. The deadline and calculation method depend on whether you had already started taking RMDs at the time of your death. In either case, the RMDs for the beneficiary account are calculated based on the surviving spouse’s age, not the deceased participant’s age.
The Bottom Line
TSP Required Minimum Distributions are not optional, and the tax penalty for missing them is steep — historically 25% of the amount that should have been withdrawn. The good news is that the TSP makes the process relatively straightforward by calculating your RMD and stepping in automatically if you fall short. The key is understanding when your distributions need to start and building them into your overall retirement income plan.
A Federal Retirement Consultant (FRC®) can help you think through how your TSP RMDs fit into your broader retirement income strategy. Schedule your complimentary benefits review today.
