Key Takeaways:
- Federal employees with TSP accounts must follow specific RMD age and timing guidelines, which differ from IRA rules.
- Missing a TSP RMD can result in IRS penalties, but recent rules and official guidance clarify how to remain compliant.
What Are TSP RMDs?
Definition and Purpose
A required minimum distribution (RMD) is the minimum amount you must withdraw each year from certain retirement accounts, like the Thrift Savings Plan (TSP), once you reach a specified age. For federal employees and retirees, RMDs ensure that tax-advantaged retirement funds are eventually distributed and taxed, supporting the broader purpose of the retirement system.
TSP RMDs follow the same general IRS guidelines as other employer-sponsored plans. The TSP, administered by the Federal Retirement Thrift Investment Board, is subject to distinct federal retirement rules and reporting procedures. Understanding your TSP RMD obligations helps you remain compliant with federal law and avoid potential tax penalties.
How TSP RMDs Differ from IRA RMDs
While both IRAs and TSP accounts require RMDs, there are key differences. IRAs follow individual account rules, while the TSP is a workplace plan governed by federal statute. The timing, calculation methods, and options for withdrawal vary between the two. TSP RMDs, for example, are overseen by TSP administrators, who use specific federal procedures rather than private-sector custodian practices.
When Must You Take a TSP RMD?
Current TSP RMD Start Age
As of 2026, the RMD start age for TSP participants is generally 73. This reflects recent updates from federal legislation, including the SECURE 2.0 Act, aligning TSP RMD ages with broader IRS requirements for workplace retirement plans. If you reach age 73 during the year, RMD rules apply for that calendar year.
First Year RMD Timing
You must take your first RMD from your TSP account by April 1 of the year following the calendar year in which you turn 73. For example, if you turn 73 in 2026, your first RMD must be taken by April 1, 2027. The amount is based on your TSP balance as of December 31 of the previous year. Note that every subsequent RMD must be withdrawn by December 31 each year.
Does Retirement Status Affect RMD Timing?
If you are still actively employed by the federal government at age 73, you can delay TSP RMDs until the year you retire. This exception applies only while you remain employed in a federal position. Once you separate from federal service, RMD withdrawals must begin according to standard rules.
How Are TSP RMDs Calculated?
IRS Life Expectancy Tables
TSP RMDs are calculated using Internal Revenue Service (IRS) Uniform Lifetime Tables. These tables project the account holder’s expected lifespan and determine the divisor used to calculate the minimum required distribution each year.
TSP RMD Calculation Example
Suppose your TSP account balance on December 31 of the prior year is $250,000 and the IRS age-based divisor for age 73 is 26.5. Divide $250,000 by 26.5 to arrive at an RMD for that year of approximately $9,434. TSP administrators issue annual statements indicating your RMD obligation, but it is your responsibility to ensure the correct distribution is taken.
Rules for Separated Employees
If you have separated from federal service, the RMD requirements take effect beginning the year you turn the required age, regardless of your employment status elsewhere. The TSP does not recognize employment with non-federal entities as grounds for a delay. Always confirm your separation date when evaluating RMD timing.
Are TSP RMD Age Rules Changing?
Recent Legislative Changes
Federal RMD age requirements have changed in recent years. Starting in 2023, the Secure 2.0 Act raised the RMD age from 72 to 73 for most workplace plans, including TSP. It is important to rely on current federal guidance, as further changes may occur through congressional action or regulatory updates.
Future Considerations
While the current RMD start age is 73, Congress occasionally reviews retirement rules as part of broader tax and retirement reform. Any additional changes will be communicated through official TSP announcements and federal channels. Remaining informed of updates ensures you stay compliant.
What Happens if You Miss a TSP RMD?
IRS Penalties and Corrections
Failing to take your required TSP RMD by the deadline may result in an IRS penalty. For 2026, the excess accumulation penalty is 25% of the amount not withdrawn as required, though participants may request a reduction to 10% if the shortfall is promptly corrected. Timely action and clear documentation are crucial for managing missed distributions.
TSP Compliance Guidelines
The TSP provides reminders and annual statements to help account holders track required distributions. It is your responsibility, not TSP’s, to ensure compliance. The TSP will automatically distribute the minimum required amount if no action is taken, but this may not reflect your preferences for taxes or withdrawal methods. Always verify that you meet or exceed your RMD each year.
Can You Delay a TSP RMD After Retirement?
Available Exceptions
The primary exception to required TSP RMD timing is active federal employment past RMD age. If you remain in qualifying service, you may delay RMDs until the year you separate. Once separated, standard RMD obligations resume.
Separation Date Implications
Your official date of separation from federal service determines whether the exception applies. If you leave federal employment during the year you turn 73, you must take an RMD by April 1 of the following year. Ensure your employment records accurately document your last day to avoid compliance issues.
Key Differences Between TSP and IRA RMDs
Account Rules Comparison
TSP accounts are subject to federal retirement rules, including possible delay of RMDs for active employees, while IRAs generally require distributions to begin upon attaining the RMD age, regardless of employment. TSP RMDs cannot be avoided by transferring funds to an IRA after the RMD is due for that year.
Withdrawal Options Compared
TSP RMDs may be satisfied through various distribution types, including monthly, quarterly, or annual payments. IRAs often permit greater flexibility or conversion strategies. However, both types must adhere to IRS guidelines on minimum withdrawals.
What Are Common Exceptions to TSP RMD Rules?
Federal Statute Exemptions
Certain limited exceptions to TSP RMD rules derive from federal statutes. Federal law allows delay of RMDs only for those actively employed by a qualifying federal agency.
Special Circumstances
Special situations—such as errors, administrative delays, or waivers granted by the IRS under qualified hardship—may also provide relief. However, such exceptions are rare and should not be assumed to apply without clear statutory or regulatory basis.
FAQs About TSP RMD Age and Rules
Who Sets TSP RMD Requirements?
TSP RMD requirements are set by federal statutes, IRS regulations, and official guidance from the Thrift Savings Plan and the Office of Personnel Management (OPM). Policy changes are directed through Congress and regulatory agencies.
How Often Do the Rules Change?
TSP RMD rules may update when Congress passes relevant legislation or when federal regulatory agencies issue new interpretations. Major changes are infrequent but can be significant when enacted.
Where to Find Official Updates
The TSP website, Office of Personnel Management communications, and IRS bulletins provide authoritative updates on RMD rules. Federal employees and retirees are encouraged to consult these official sources for the most current requirements.
