A TSP rollover is 1 of 4 options open to you at separation, and every rule on this page was verified on 10 September 2026 against the plan’s own pages and the IRS. The 4 are not equally reversible. Two of them can be undone or adjusted at any point afterwards, 1 can be undone only in part, and 1 cannot be undone at all once it has been done.
This page sets out what the plan and the IRS actually say about each, what each costs, and which ones close doors. Every rule below was read off tsp.gov or irs.gov on 10 September 2026 rather than restated from secondary coverage, and the links are at the foot of the page.
What are the TSP withdrawal options after leaving federal service?
There are four, and tsp.gov allows most of them to run alongside each other. You can leave the balance invested, take a partial distribution of a specified amount, receive installments on a schedule, or use some or all of the balance to buy a life annuity. Taking a total distribution empties the account entirely.
The plan does not force a decision on any timetable, which is the part people arriving here most often have wrong. A vested balance of $200 or more can stay in the TSP after separation for as long as you want it there.
Vested balance needed to keep the account
What the five funds charge a year
Minimum partial distribution
Leaving the balance in the TSP
The default costs less than any alternative available to a private investor. The five individual funds charged between 0.034% and 0.051% for 2025, verified against tsp.gov on 10 September 2026, which on $100,000 is $34 to $51 a year, and the plan publishes both halves of that figure rather than quoting only a total.
What a separated participant gives up is the ability to make new contributions and, for anyone still working, the agency match. What they keep is the fee structure, the G Fund, and a plan that has never charged a sales commission on anything. Anyone whose reason for moving is dissatisfaction with performance rather than with cost should look at what the five funds actually returned before treating the move as an upgrade.
Whether a move out belongs in your own position depends on the custodian who would hold the balance and what they charge to hold it.
See which custodians take a TSPTaking installments or a partial distribution
Installments are automatic withdrawals on a schedule you set, and they can be changed or stopped. A partial distribution is a one-off payment of a specified amount, has to be at least $1,000, and tsp.gov confirms you can take one even while installments are already running. Neither option closes the account, so neither forecloses anything.
Both are taxable in the year received unless the money goes to another plan or an IRA, and both leave the remaining balance where it is, still invested and still charged at the plan’s rates.
Buying the TSP annuity
The plan buys a life annuity for you from an outside vendor, and in exchange for guaranteed monthly payments for life you hand over the money. tsp.gov puts it in unusually blunt terms for a government page, stating that you give up your money and control of it, that the annuity is no longer part of your TSP account once purchased, and that you cannot change or cancel the purchase.
That last clause is the whole decision. An annuity solves the problem of outliving a balance, which is a real problem that no fund allocation solves, and it does so by removing every other option permanently. Whether it is the right instrument depends on health, on whether a pension already covers essential spending, and on how much of the balance is being committed rather than on whether annuities are good in the abstract.
What a total distribution does to your TSP account
A total distribution pays out the entire balance and sets the account to zero. tsp.gov then adds a consequence that almost never appears in coverage of this decision: once processed, you will no longer be able to move money into the TSP from eligible plans.
That is a one-way door, and it is the least understood fact in this whole area. A participant who empties the account and later decides the fee structure was worth keeping cannot go back. Every future dollar of that retirement money will sit somewhere charging more, because there is nowhere cheaper to put it. Against the $51 a year the dearest TSP fund charges on $100,000, a self-directed IRA custodian fee plus a depository storage fee commonly runs $300 a year regardless of balance, which is roughly 6 times as much and does not scale down for a smaller account.
Direct rollover against indirect rollover
The distinction decides whether tax is withheld. The IRS describes a direct rollover as the plan administrator paying the receiving plan or IRA directly, with no taxes withheld from the transfer amount. An indirect rollover pays you first, withholding applies, and you then have 60 days to deposit the money into the receiving account.
The trap in the second route is arithmetic rather than legal. Because tax was withheld before you received the money, redepositing the full original amount inside 60 days means making up the withheld portion out of your own pocket, and the IRS says so directly. Anything not redeposited is treated as a distribution and taxed, with an early withdrawal penalty on top where one applies.
For a move into a self-directed IRA holding metal, the direct route is the only one worth considering. The purity rules under section 408(m) then govern what bullion can be held, and it has to sit at an approved depository rather than at home.
What the tax code permits once a balance reaches a self-directed IRA, and which coins and bullion qualify, is set out on TSP to gold IRA.
The four options ranked by what they cost to undo
Reversibility is a better lens than return here, because the return on every option depends on choices made afterwards while the reversibility does not.
Leaving the balance costs nothing to undo, since you can start installments or move the money at any point. Installments and partial distributions cost the tax on what has already come out, and nothing else. A rollover to an IRA is undoable only in the sense that the money can be moved again, but never back into the TSP once the account is emptied. The annuity cannot be undone at all.
Our read
Most of the argument for leaving the plan is an argument about what to hold rather than about where to hold it, and those are separable. A participant who wants exposure to something the TSP does not offer has to leave in order to get it, and that is a legitimate reason. A participant who is unhappy with returns is describing an allocation problem that five funds can address without a rollover and without a fee schedule twenty times higher.
What we would want anyone to notice before deciding is that the G Fund, the option most separated participants drift toward, returned 0.43% a year after inflation between 2003 and 2026. Staying in the plan is not the same as staying safe, and the two get conflated constantly.