For former federal workers who are age 70½ or older that stopped working in the federal government on or before Dec. 31, 2004, the deadline is fast approaching to begin withdrawing your TSP account.
According to the TSP web site, those who separated from federal service on or before Dec. 31, 2004 must begin withdrawing their TSP account before April 1, 2005. The TSP requires that you withdraw your entire account balance in a single payment, begin receiving monthly payments, purchase a TSP annuity, or use a combination of these withdrawal options. This withdrawal deadline is the same as that stated in Internal Revenue Code (I.R.C.) rules for “required minimum distributions” described in Section 2.
The penalty for not withdrawing the account by the required deadline is that the individual’s account balance is forfeited to the TSP. While individuals can reclaim their account, they will not receive earnings on the account from the time it was forfeited. To reclaim the account, the individual must make a full withdrawal election.