Required Minimum Distributions and Your TSP

Traditional TSP money has never been taxed. That's the deal: you got a tax break when you contributed, and the tax is collected when the money comes out. Required minimum distributions, or RMDs, are how the tax system makes sure it eventually does come out.

When they start

Under current law, RMDs begin at age 73 for people born from 1951 to 1959, and at age 75 for people born in 1960 or later. The rules have changed several times in recent years, so if you're reading this some time after it was published, confirm the current ages with the IRS or the TSP.

Two details matter for federal employees in particular:

• Still working, no RMD from the TSP. If you're still employed in federal service, you generally don't have to take RMDs from your TSP account. They start once you've separated and reached the required age.
• The first one can be delayed, with a catch. Your first RMD can generally be taken as late as April 1 of the following year. But the second is still due by the end of that same year, so delaying means two taxable distributions in one tax year.

How the TSP handles it

The TSP calculates your required amount each year. If the withdrawals you've already chosen during the year add up to at least that amount, there's nothing extra to do. If they don't, the TSP pays out the remainder automatically before the deadline.

That's reassuring, but it's not a strategy. An automatic distribution arrives on the TSP's timetable, with whatever tax withholding applies, and it adds to your taxable income for the year whether or not that suits you.

Roth is different

Money in the Roth side of your TSP is treated differently. Since 2024, Roth balances in workplace plans like the TSP are no longer subject to required minimum distributions during your lifetime. If you have both traditional and Roth money, the requirement applies to the traditional part.

That difference is one reason some people pay attention, well before retirement, to how much of their savings sits on each side.

Why the timing matters

RMDs are calculated from your balance and your age, and the required percentage rises as you get older. A large traditional balance left untouched until your seventies can produce required withdrawals big enough to push you into a higher tax bracket, raise the share of your Social Security that's taxed, and affect income-based Medicare premiums.

That's why the years between retirement and your first RMD can matter so much. Depending on your situation, drawing on your TSP during those years, while your income is lower, can smooth out the tax picture later. Whether that makes sense for you depends on your pension, your Social Security timing and your other income, which is exactly the kind of question a qualified tax professional is for.

How this connects to your TSP options

RMDs don't replace the choices you make about your TSP; they set a floor under them. If your planned withdrawals already exceed the required amount, RMDs may never change anything for you. If you were planning to leave the money untouched, they will. That's worth knowing as you read the five options for your TSP at retirement.

Where to go from here

The TSP's own materials at tsp.gov and the IRS are the authorities on RMD rules, and a tax professional can help with the timing. For where RMDs sit among the other decisions, see The TSP Secure Path.