Updated: August 28, 2026
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About 154,000 federal employees accepted the 2025 Deferred Resignation Program. Most consumer coverage focused on the buyout math or the workforce framing. Very few pages walked through what actually happens to a Thrift Savings Plan account across the admin-leave period and into the day the participant status flips at the TSP recordkeeper.
This page walks the timeline in mechanics only, from acceptance signature to the four clocks that start on the separation date. No option is recommended here. Every DRP participant faces a different personal situation, and the choice among the documented destinations for the account belongs to that participant.
What the Deferred Resignation Program actually is
The Deferred Resignation Program, offered under Office of Personnel Management guidance in 2025, is an administrative-leave-through-separation arrangement. A participating employee signs a resignation with a future effective date. Between signature and that date, the employee stays in paid status on federal payroll and keeps standard federal benefits.
Most 2025 DRP agreements ran through September 30, 2025 or later, depending on the agency and the specific offer window. Some late-window offers had separation dates in October, November, or December 2025. A few extended into early 2026. The exact effective date is written on the signed agreement and drives every clock discussed below.
TSP status during the administrative-leave period
During the admin-leave period, the participant remains a federal employee for payroll and benefits purposes. That single fact drives every TSP behavior that follows. The account is still an active-participant account. The recordkeeper does not treat the participant as separated on the day admin leave begins.
Employee TSP contributions continue at the elected biweekly percentage or dollar amount. FERS agency contributions continue in the same pay period: the automatic 1 percent, plus the matching up to 4 percent on the employee elective deferral. CSRS employees receive no agency match, so only the elected employee contribution flows in.
Any active TSP loan continues to have its installments deducted from each biweekly paycheck. The loan does not enter the post-separation repayment window while admin leave is still running. Nothing about the account is treated as separated yet. Fund allocations, glide paths inside the L Funds, and interfund transfer limits all behave as they did before admin leave began.
The trigger event that flips your TSP account
The trigger is not the last day of admin leave. The trigger is when the employing agency processes the SF-50, the Notification of Personnel Action, with a separation code, and that record reaches the TSP recordkeeper. The most common code for a DRP separation is nature-of-action code 312, resignation.
The agency payroll office transmits the separation record electronically to the TSP after processing. The TSP flips the participant status from active to separated on receipt of that record. Historically, agency SF-50 transmission to the TSP arrives within about 30 days of the effective separation date. Very high volume across late 2025 may have slowed that pace at some agencies.
The status flip is the operational event that unlocks post-separation actions inside the TSP. Nothing you do at tsp.gov before the flip lands moves the account into post-separation mode. Separated-participant menus at tsp.gov become selectable only after the recordkeeper marks the account as separated.
The full DRP TSP timeline at a glance
Seven stages describe the account state across the DRP arc, from signature to the day the four post-separation clocks start ticking. The figure below lays out the sequence.
The four clocks that start on the separation date
On the effective separation date, four clocks begin counting for TSP purposes. Each one has its own rulebook and its own paperwork. Understanding which clock applies to your birth year, age at separation, and loan status is the entire mechanical picture of TSP after DRP.
The age-55 calendar-year rule window
Internal Revenue Code section 72(t)(2)(A)(v) exempts distributions from a qualified plan from the 10 percent additional early-withdrawal tax if the participant separates from service in or after the calendar year they turn age 55. For TSP purposes, the participant does not need to be 55 on the separation date itself.
The participant needs to be 55 by December 31 of the year they separate. Special category employees, including qualifying public safety officers, may qualify at age 50 under IRC 72(t)(10). This carve-out applies only to distributions taken directly from the TSP. It does not survive a rollover to an IRA.
The 90-day post-separation loan repayment window
A separated participant with an outstanding TSP loan has 90 days from the date the TSP receives the SF-50 to repay the loan in full. The clock does not start on the effective separation date. It starts when the recordkeeper receives the separation record from the agency, which can be several weeks later.
Missing that window converts the unpaid balance into a plan loan offset or a deemed distribution, depending on the exact coding used by the recordkeeper. The two codes have very different tax treatment and rollover options. Our page on the TSP loan rollover and deemed-distribution trap covers the code selection, the rollover deadline, and the paperwork sequence.
The RMD countdown at age 73 or 75
The SECURE Act 2.0 of 2022 changed the required minimum distribution starting age for TSP and other qualified retirement plans. Participants born 1951 through 1959 reach RMD age at 73. Participants born 1960 or later reach RMD age at 75. Participants born 1950 or earlier were already under prior rules.
Once a TSP participant is separated and reaches RMD age, the recordkeeper must ensure a minimum amount is distributed by April 1 of the year after the participant reaches that age, and by December 31 each year after. An active participant working past RMD age has different rules that no longer apply once separated.
Distribution-method eligibility
Only a separated participant can use the full menu of TSP post-separation distribution methods. That menu includes lump-sum withdrawal, partial withdrawal, installment payments in fixed dollar amounts or based on IRS life-expectancy tables, TSP life annuity purchase through Metropolitan Tower Life, and direct rollover to another eligible retirement plan or IRA.
An active participant cannot select from this menu, only from the more limited in-service withdrawal options. The status flip at the recordkeeper is what unlocks the full post-separation menu. A DRP participant reviewing options at tsp.gov before the flip has landed may still see only the active-participant menu.
What does not change at TSP on the day of separation
The fund holdings inside the account stay exactly as they were on the day before separation. If the participant was in the G Fund, they remain in the G Fund. If they were in an L Fund, the L Fund glide path continues on its published schedule. C, S, I, and F Fund allocations stay in place.
The recordkeeper does not sell, reallocate, or convert anything at the status flip. Fund expense ratios continue to apply as before. Interfund transfers remain available inside the TSP under the two-plus-unlimited monthly transfer rule. The status flip changes the menu of actions available to the participant, not the account contents.
If you have an outstanding TSP loan at separation
Federal employees with an active TSP loan at separation face the most time-sensitive of the four clocks. The 90-day repayment window is short by design. A participant who cannot repay in full from outside cash needs to know how the resulting Form 1099-R will be coded.
The two possible codes are L, for a deemed distribution, and M, for a qualified plan loan offset under IRC 402(c)(3)(C). Code M unlocks an extended rollover window running to the participant’s federal tax-filing deadline for the year of separation, including extensions. Code L does not. The distinction is worth confirming with the TSP within 30 days of the 1099-R issue date.
Where a separated TSP account can go
Once the status flip lands, a DRP-separated TSP participant has five documented destination categories for the account balance. Each is available under existing federal law. The choice among them is personal and depends on the participant’s age, tax situation, other assets, and circumstances.
- Stay in the TSP. Separated participants can leave the balance in place, keep their existing fund allocation, and continue interfund transfers. The TSP charges low expense ratios and offers the G Fund, a security available only inside the TSP.
- Rollover to another employer retirement plan. Traditional or Roth TSP dollars can be rolled to a new employer’s 401(k), 403(b), or 457(b) governmental plan if that plan accepts incoming rollovers under IRC 402(c).
- Rollover to an IRA. Traditional TSP dollars land in a Traditional IRA and remain pre-tax until distribution. Roth TSP dollars roll directly to a Roth IRA. Traditional TSP dollars rolled to a Roth IRA become taxable in the year of the rollover as a Roth conversion.
- Rollover to a self-directed IRA holding IRS-approved precious metals under IRC 408(m)(3), which is one of the documented destinations available to separated retirement plan participants.
- Take cash or purchase a TSP annuity. A full or partial cash distribution is taxable in the year received and subject to the 10 percent additional tax unless a section 72(t) exception applies. A TSP life annuity through Metropolitan Tower Life converts the balance into a stream of monthly payments.
This page documents the mechanics only. It does not recommend any option. A DRP-separated participant weighing these destinations should consult a fiduciary financial advisor and a tax professional before acting, particularly on any rollover that involves a Roth conversion or a self-directed IRA custodian transition.
Updated August 28, 2026.
Sources cited
- TSP: Changes in your career, Leaving the federal government
- TSP booklet: Withdrawing from your TSP account for separated and beneficiary participants (tspbk26)
- Federal News Network: What federal workers should consider before accepting deferred resignation
- Cornell LII: 26 U.S.C. section 408, individual retirement accounts (including 408(m)(3) IRS-approved metals)
- IRS: Retirement topics, required minimum distributions (RMDs)