Updated: August 29, 2026

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Installment payments are the most flexible of the four post-separation options the Thrift Savings Plan offers a separated participant or a Beneficiary Participant Account holder. They are also the option participants most commonly misconfigure, because the three configuration modes carry different tax-withholding and rollover-eligibility rules that are not obvious from the tsp.gov withdrawal screen.

This page documents the mechanics of the three configuration modes, the minimum payment amount, and the rollover-eligibility rule that separates the modes. It also covers the RMD interaction that kicks in once the participant reaches the applicable RMD age. It does not recommend a mode, a payment size, or a destination for any rolled amount. Those choices belong to the participant and their tax professional.

Table of contents show

The three configuration modes

The TSP withdrawal request lets a participant choose one of three ways to size an installment payment. Each mode uses a different formula, and the resulting expected duration of the payment stream drives the tax classification.

Mode 1: fixed dollar amount per payment. The participant enters a specific dollar figure. Every scheduled payment sends that same amount to the participant or to the receiving custodian. The TSP continues the schedule until the account balance is exhausted or the participant modifies the request.

Mode 2: fixed number of years, divided into equal amounts. The participant enters the desired duration in years. The TSP divides the current balance by the number of scheduled payments in that period and pays each installment as the same fraction of the balance. Because the balance moves each year with market returns and continued withdrawals, the per-payment dollar amount recalculates annually.

Mode 3: IRS life expectancy tables. The TSP divides the December 31 balance of the prior year by the participant’s life expectancy factor from the IRS Uniform Lifetime Table in Publication 590-B Appendix B. The factor updates each year as the participant ages, so the payment amount also recalculates each January.

The mode selection appears in the participant’s My Account withdrawal request under the installment configuration screen. A participant can start with one mode and change to another at any time without submitting a full new withdrawal election.

Payment frequency and the 25 dollar minimum

The participant selects one of three payment frequencies at the same screen: monthly, quarterly, or annual. The frequency does not change the tax classification, but it does change the smallest installment the TSP will process.

Under a fixed dollar amount configuration, each scheduled payment must be at least 25 dollars. A participant who sets a 20 dollar monthly installment on a small balance will have the request rejected at submission. The 25 dollar floor applies per payment, not per year, so an annual schedule at 25 dollars is valid even though it produces a 25 dollar yearly cash flow.

The fixed-years and life-expectancy modes do not carry a per-payment minimum in the same form, because the amount is derived from the balance and the schedule. A very small balance combined with a long expected duration can produce a computed installment below what the TSP will process. The participant then has to shorten the duration or switch modes.

The rollover-eligibility rule: 10 years and life expectancy

The single most important classification for a participant planning any rollover from installments is the 10-year test. It comes from the IRS definition of a periodic payment and it is spelled out in TSP booklet tspbk26 on pages 10 and 11.

An installment is treated as a periodic payment under IRC section 402(c)(4) if it is expected to last 10 years or more, or if it is based on the participant’s life expectancy. A periodic payment is not eligible for rollover. The TSP will not process a rollover request on any installment payment that falls in this bucket, and a receiving IRA or plan cannot accept the payment as an indirect 60-day rollover either.

An installment is treated as an eligible rollover distribution if it is expected to last under 10 years and it is not based on life expectancy. The TSP will process a direct trustee-to-trustee rollover on each installment in this bucket, and the receiving custodian records it under Form 1099-R Box 7 Code G.

The expected duration is set at the time the installment schedule is configured, based on the mode and the current balance. A change of mode or a change of amount that alters the expected duration flips the classification for all future payments from that point forward.

Tax withholding on the two classifications

Federal tax withholding follows the classification directly. The withholding architecture on TSP payments is the mirror image of the rollover-eligibility rule.

Rollover-eligible installments (under 10 years, not life expectancy) paid to the participant carry the mandatory 20 percent federal withholding floor under IRC section 3405(c). The 20 percent is deducted from every payment before it reaches the participant’s bank. A direct trustee-to-trustee rollover on the same installment bypasses the 20 percent floor because no cash reaches the participant.

Non-rollover-eligible installments (10 years or more, or life expectancy) follow the periodic payment rules on IRS Form W-4P. The participant elects the withholding amount by filing a W-4P with the TSP; if no valid W-4P is on file, the TSP applies the default treatment set out in the current-year Form W-4P instructions. The participant can adjust the election at any time.

Modifying installments after they start

A participant can modify installment payments at any time through the My Account tsp.gov portal. The modifications the TSP accepts on a running installment schedule are:

Change the payment amount (fixed dollar mode only)
Change the payment frequency (monthly, quarterly, or annual)
Switch between the three configuration modes
Stop the installments entirely
Change the withholding election on non-rollover-eligible installments

A modification that changes the expected duration of the schedule can flip the tax classification of future payments. A participant who moves from a fixed dollar amount expected to run 6 years into a life-expectancy schedule loses rollover-eligibility on every payment starting with the modification effective date. A participant who moves the other way gains rollover-eligibility on future payments.

The TSP does not retroactively reclassify past payments. A payment already made under one classification keeps that classification for tax reporting on the 1099-R. Only future payments are affected by the modification.

How required minimum distributions interact with installments

SECURE 2.0 Act section 107 set the applicable RMD age at 73 for participants who turn 72 after December 31, 2022. Once the participant reaches that age, the TSP begins tracking the required minimum distribution each calendar year. The RMD calculation uses the Uniform Lifetime Table in IRS Publication 590-B Appendix B for the participant’s age that year, applied to the prior-year December 31 balance.

If the participant’s installment payments for the calendar year add up to at least the RMD amount, the RMD is satisfied and no separate supplemental payment is issued. If the installments for the year fall short, the TSP supplements the shortfall as an RMD payment in December, so the participant’s total distributions for the year equal the RMD.

The RMD portion of any payment is not rollover-eligible under IRC section 402(c)(4)(B). This applies regardless of the installment mode. Take a participant who runs a rollover-eligible fixed-dollar schedule at 500 dollars a month and reaches an RMD age with an RMD of 8,000 dollars for the year. The first 8,000 dollars of that year’s payments carry no rollover eligibility. Only the excess above the RMD retains eligibility.

Life-expectancy installments and the Uniform Lifetime Table

A participant who selects the life-expectancy mode has the TSP recompute the payment each January using the divisor from the Uniform Lifetime Table for the participant’s age that year. The table is reprinted in IRS Publication 590-B Appendix B and was updated for 2022 and later years under final regulations published in the Federal Register in November 2020.

For a participant who is age 73 on the recomputation date, the Uniform Lifetime divisor is 26.5. The first-year payment on a 500,000 dollar balance in life-expectancy mode is 500,000 divided by 26.5, which equals 18,868 dollars for the year, or 1,572 dollars a month at a monthly frequency. The following year, at age 74, the divisor is 25.5; assuming a hypothetical balance of 490,000 dollars at that point, the payment recomputes to 19,216 dollars for the year.

The recomputation always uses the current-year divisor and the prior-year end balance. The participant does not need to submit paperwork each January; the recomputation runs automatically. A participant who wants a different amount for a given year has to switch modes to fixed dollar or fixed years and enter the desired figure.

Switching from installments to a partial distribution or an annuity

Since the TSP Modernization Act of 2017 took effect in September 2019, running installments and taking partial distributions or purchasing a life annuity are compatible. A participant on an installment schedule can request a partial distribution from the remaining balance at any time, subject to the 30-day spacing rule between partial withdrawals, without stopping the installments.

A participant can also elect to use part of the remaining balance to purchase a TSP life annuity through the TSP annuity provider (Metropolitan Tower Life). The annuity purchase is a separate election on the My Account withdrawal screen, and the participant chooses how much of the remaining balance to convert. Installments continue on the balance that stays in the TSP.

The reverse is also permitted. A participant who took a partial distribution first and then started installments can modify or stop the installments and take another partial later, again subject to the 30-day spacing rule. The pre-Modernization rules that forced participants into a single lifetime full-withdrawal election no longer apply.

Illustrative example: a 500,000 dollar balance in fixed-dollar mode

A separated participant holds a 500,000 dollar Thrift Savings Plan balance and configures a fixed-dollar installment schedule at 2,500 dollars a month. At a hypothetical zero investment return (the balance neither grows nor shrinks from returns), the participant can compute the expected duration.

500,000 dollars divided by 2,500 dollars per month equals 200 months, or 16.7 years. The 10-year threshold on a 500,000 dollar balance requires a monthly figure of at least roughly 4,167 dollars. The 2,500 dollar amount sits below that cutoff and produces an expected duration well beyond 10 years. Positive market returns extend the schedule further; negative returns shorten it.

Because the expected duration is 16.7 years at zero return, the schedule is a periodic payment under IRC section 402(c)(4). The installments are not rollover-eligible. Payments to the participant follow the W-4P withholding election, not the 20 percent floor.

If the same participant instead configured 5,000 dollars a month on the same 500,000 dollar balance, the zero-return expected duration would be 100 months, or 8.3 years. That schedule is under 10 years, is not based on life expectancy, and is therefore rollover-eligible. Payments sent to the participant would carry the 20 percent floor; a direct trustee-to-trustee rollover would skip the floor.

The figure below compares the three configuration modes applied to the same 500,000 dollar balance, using the numbers documented in the sections above.

Horizontal bar chart of expected installment duration in years on a 500,000 dollar TSP balance for three configuration modes at zero investment return. Case A, fixed dollar at 2,500 dollars a month, produces a 16.7 year expected duration and is not rollover-eligible because it exceeds the 10 year threshold under IRC section 402(c)(4). Case B, fixed dollar at 5,000 dollars a month, produces an 8.3 year expected duration and is rollover-eligible. Case C, life expectancy mode at age 73 using the IRS Uniform Lifetime Table divisor of 26.5, produces a 26.5 year first-year expected duration and is not rollover-eligible because it is based on life expectancy. A vertical dashed reference line at 10 years marks the rollover-eligibility threshold. — Figure 1. Expected installment duration in years on a 500,000 dollar TSP balance for three configuration modes at zero investment return. The 10 year threshold separates rollover-eligible schedules (below) from periodic payments not eligible for rollover (above or based on life expectancy). Sources: TSP booklet tspbk26 pages 10 and 11; IRC section 402(c)(4); IRS Publication 590-B Appendix B Uniform Lifetime Table.

One factual note on gold IRA destinations

A Traditional IRA that holds IRS-approved precious metals under IRC section 408(m)(3) is one of the documented destinations available to a separated TSP participant electing a direct rollover on rollover-eligible installments. The 1099-R code on that rollover is G, and the 20 percent federal withholding floor does not apply. No cash reaches the participant.

Updated August 29, 2026.

TSP Installment Payments: Fixed Dollar, Fixed Years, or Life Expectancy