If I Separate From Federal Service, What Happens To My Thrift Savings Plan (TSP) Account Balance?

You are fully vested in (that is, entitled to keep) your own contributions and any earnings on these contributions. If you are covered under the Federal Employees Retirement System (FERS), you are fully vested in any Agency Matching contributions, plus earnings. In addition, if you have at least 3 years of civilian Federal service, you are vested in the Agency Automatic 1% contributions, plus earnings.

TSP is a portable retirement benefit. You have the option of leaving your money in your TSP account; transferring it to an IRA or other eligible plan; or withdrawing it. Some of the advantages of leaving your money in your TSP account include low administrative and investment fees; a diversified choice of investment options (TSP), including the professionally designed lifecycle funds (TSP); and a number of withdrawal options (TSP). Some of the disadvantages include fewer investment options than an IRA and the limitation of a one-time partial withdrawal which is less flexible than that of an IRA.

If you have questions, please direct them to your benefits contact.

Source: http://hr.od.nih.gov/benefits/news/previousnews/2011/apr11.htm#seperation

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