Will TSP withdrawals count as income against my SSDI limits in 2025?

Good news - TSP withdrawals won't count against your SSDI earnings limit. The SGA limit only applies to earned income from work activity. Retirement account withdrawals are considered unearned income (like interest or dividends) and don't affect your SSDI eligibility. However, if you were receiving SSI (Supplemental Security Income) instead of SSDI, then it WOULD count as income and resources for that program. But for SSDI, you're fine on this front. Just remember you'll owe income tax on the withdrawal, and possibly an early withdrawal penalty if you're under 59½ (unless you qualify for an exception).

my uncle did TSP withdrawls last yr when he was on SSDI and SSA didnt care at all. they only look at actual work $ from what he said. but watch out for the tax hit, he was surprised how much they took out!!

I went through exactly this situation in 2023. You're absolutely correct that TSP withdrawals don't count against SSDI limits. The Social Security Administration only counts earned income from work when calculating SGA limits for SSDI recipients. However, there are a few important things to consider: 1. You will pay ordinary income tax on traditional TSP withdrawals 2. If you're under 59½, there's a 10% early withdrawal penalty (with some exceptions) 3. If you withdraw too much at once, it could push you into a higher tax bracket Have you considered taking a TSP loan instead of a withdrawal? That would avoid the taxes and penalties, though you'd need to repay it.

Just adding my personal experience - I've been on SSDI for 5+ years and have taken withdrawals from my 401k twice during that time. The SSA never counted it as income for SSDI purposes. The SGA limit ONLY applies to earned income from work activity. However, trying to reach someone at SSA to confirm this was IMPOSSIBLE. Was on hold for 3+ hours multiple times and kept getting disconnected. I finally used a service called Claimyr (claimyr.com) that held my place in line and got me connected to an agent in about 20 minutes. They have a video showing how it works: https://youtu.be/Z-BRbJw3puU The agent confirmed that retirement account withdrawals don't count against SSDI, so I had peace of mind before making my withdrawal.

I'm in the EXACT SAME SITUATION!!! On SSDI and need to tap my retirement $$$. But my question is - what about if I'm close to Medicare age? Will taking money out of TSP affect my Medicare premiums later??? I heard something about IRMAA and higher premiums if your income is higher. Anyone know about this????

In my experience with the SSA (former claims specialist for 15 years), TSP withdrawals are definitely NOT counted as earned income for SSDI. They have no impact on the SGA limit. However, I've seen people get confused because: 1. They confuse SSDI with SSI (which DOES count all income including TSP withdrawals) 2. They don't realize TSP withdrawals are still reported to IRS and show up on tax returns 3. They don't understand that Medicare IRMAA surcharges are affected by all income, including TSP withdrawals So while your SSDI benefits are safe, just be aware of these other potential impacts.

The SSDI limits are RIDICULOUS anyway. How is anyone supposed to live on that??? The government expects disabled people to survive on poverty wages while politicians make six figures. The whole system is BROKEN. I can barely pay rent with my SSDI check and now we have to worry about touching our own retirement money??

Thanks everyone for the helpful replies. Just to summarize what I've learned for anyone else in my situation: 1. TSP withdrawals will NOT count against SSDI's SGA limit (currently ~$1,550/month for 2025) 2. This is because TSP withdrawals are considered unearned/passive income 3. If I were on SSI instead of SSDI, it WOULD count (thankfully I'm not) 4. I'll still pay income tax + 10% early withdrawal penalty 5. A TSP loan might be better than a withdrawal in my situation 6. The withdrawal might affect Medicare premiums later via IRMAA This community is amazing - you've saved me so much stress!

Hey Camila - just wanted to add one more thing about TSP loans that might help with your decision. Since you're no longer a federal employee, you CAN still take a TSP loan if you haven't already taken one out. The loan limit is typically 50% of your vested balance or $50,000, whichever is less. The big advantage is you're essentially paying interest back to yourself (currently around 4.125% I think), and there's no tax hit or early withdrawal penalty. You just need to make sure you can handle the monthly payments - they're usually spread over 1-5 years. However, if you default on the loan, it becomes a taxable distribution with penalties. Given that you're on SSDI with limited income, make sure the payment amount works with your budget before going this route. But it could save you thousands compared to a straight withdrawal!

Just wanted to chime in as someone who's been navigating SSDI for a while - you've gotten excellent advice here! The TSP loan route sounds like your best bet given your situation. I made the mistake of doing a straight withdrawal from my 401k a few years back and the tax hit was brutal, especially with the 10% penalty. One thing I'd add - if you do go the loan route, set up automatic payments if possible. TSP makes it pretty easy, and it removes the risk of accidentally missing a payment (which could trigger the loan becoming a taxable distribution). Also, since you mentioned hoping to return to part-time work next year, remember that if you do get a new job, you can potentially transfer the TSP loan to your new employer's 401k plan to continue payments. The peace of mind of not affecting your SSDI benefits is huge. I spent weeks worrying about a much smaller withdrawal before I learned the rules. Sounds like you're making a well-informed decision!

I'm in a similar boat and went through this research last year. Can confirm that TSP withdrawals absolutely do NOT count against your SSDI earnings limit - only earned income from actual work activities count toward the SGA threshold. However, I'd strongly recommend exploring the TSP loan option that others mentioned before doing a withdrawal. I ended up taking a $10,000 TSP loan instead of a withdrawal and it saved me thousands. The current interest rate is around 4.125% and you're paying it back to yourself. Much better than the taxes + 10% penalty you'd face with a withdrawal. The TSP loan application process is pretty straightforward through their website, and as a former fed employee you should still be eligible. Just make sure the monthly payment amount works with your SSDI budget. Good luck with whatever you decide!

Just want to add another perspective as someone who's been on SSDI for 6 years - everyone here is absolutely right that TSP withdrawals won't affect your SSDI benefits. The key distinction is that SSDI only cares about "earned income" from work activity, not passive income from investments or retirement accounts. That said, I'd also strongly encourage you to look into the TSP loan option before doing a straight withdrawal. I made a similar withdrawal from my old 401k early in my SSDI journey and really regretted it when tax time came. Between federal taxes, state taxes, and that 10% early withdrawal penalty, I lost about 35% of what I withdrew. It was painful. The TSP loan lets you access your money without that immediate tax hit, and the interest you pay goes back into your own account. Plus, if your back injury continues to improve and you can return to work sooner than expected, you'll have preserved more of your retirement savings for the future. Whatever you decide, you're asking the right questions and getting good advice here. Don't let the financial stress get to you - there are options available!

As someone who works in retirement planning, I want to emphasize what others have said about the TSP loan being your best option here. You've gotten excellent advice from this community! One additional consideration: TSP loans have a processing time of about 7-10 business days once approved, so if you need the money urgently, factor that into your planning. Also, the loan payments are typically deducted monthly, and you can choose terms from 1-5 years depending on your comfort level with the payment amount. Since you mentioned credit card debt, make sure to run the numbers - TSP loan interest (currently around 4.125%) versus your credit card rates. In most cases, using the TSP loan to pay off high-interest credit cards is a smart financial move that'll save you money long-term. The peace of mind knowing your SSDI benefits aren't at risk is invaluable. You're making a thoughtful, well-researched decision here. Best of luck with your recovery and getting your finances back on track!

As someone who's been helping people navigate federal benefits for years, I want to reinforce what everyone has said - you're absolutely safe taking TSP withdrawals while on SSDI. The Social Security Administration only counts earned income (wages, self-employment income) toward the SGA limit, not unearned income like retirement distributions. However, I'm really glad to see so many people steering you toward the TSP loan option! That's definitely the smarter financial move if you can swing the monthly payments. One thing I didn't see mentioned - if you're still unsure about the loan payments fitting your budget, TSP allows you to do a partial withdrawal combined with a loan. So you could potentially take a smaller loan for most of what you need and do a minimal withdrawal for the rest, reducing your overall tax hit. Also, don't forget to check if you qualify for any hardship exceptions to the 10% early withdrawal penalty if you do end up needing to withdraw some funds. Medical expenses, disability-related costs, and preventing foreclosure/eviction are among the qualifying reasons. You're asking all the right questions and getting great advice here. Whatever route you choose, your SSDI benefits will remain intact!

Just wanted to add my experience as someone who went through this exact situation about 18 months ago. I was on SSDI and needed to access my TSP funds due to mounting medical bills. After doing tons of research (and losing sleep over it), I can confirm that TSP withdrawals absolutely DO NOT affect your SSDI benefits - they're considered unearned income and don't count toward the SGA limit. However, I ended up going the TSP loan route after running the numbers, and I'm so glad I did. I borrowed $12,000 at the time, and the monthly payments were very manageable even on my SSDI budget. The interest rate was lower than what everyone's mentioning now (mine was around 3.8%), but even at current rates it's still way better than the tax hit you'd take with a withdrawal. One tip that really helped me: I called TSP directly to walk through my options before applying. Their customer service was actually pretty good, and they explained everything clearly. The whole loan process took about 10 days from application to getting the funds deposited. Your SSDI is safe either way, but the loan route will definitely save you money in the long run. Hope your back continues to improve and you can get back to work when you're ready!

I've been following this thread as someone who went through a similar TSP situation while on SSDI, and I'm really impressed with the quality of advice here! Just wanted to add one more data point - I took a TSP loan about two years ago for $6,500 and it was honestly one of the best financial decisions I made during my disability period. The application process through TSP's website was straightforward, and like others mentioned, calling them directly really helped. They were able to explain exactly how the payments would work with my specific situation. I chose a 3-year repayment term which kept my monthly payments around $190 - very manageable on my SSDI income. What I found really helpful was that TSP sends you a clear amortization schedule showing exactly how much of each payment goes to principal vs. interest, and how the interest goes back into your own account. It felt good knowing I wasn't losing money to a bank or credit card company. The peace of mind knowing my SSDI benefits were completely unaffected was huge. The loan route definitely sounds like your best bet - you'll avoid that painful tax hit and early withdrawal penalty while still getting the funds you need. Best of luck with whatever you decide!

I'm so glad you found this community and got such thorough answers! As someone new to navigating both SSDI and retirement account decisions, I've learned so much just from reading through this thread. The distinction between earned vs. unearned income for SSDI purposes is something I never fully understood before. It sounds like the TSP loan route is definitely the way to go based on everyone's experiences. The fact that multiple people have successfully done this while on SSDI and saved thousands compared to straight withdrawals is really compelling evidence. I'm bookmarking this thread for future reference - the real-world payment amounts and timelines everyone shared are incredibly valuable. Hope your back continues to heal and you're able to get your finances back on track without any stress about your benefits. Thanks to everyone who shared their knowledge here!