I'm a Fed, and have made a TSP withdrawal. There are two types - loans and "I just want the money". I did a loan, the rate was reasonable and the principle and interest was paid back via payroll deduction to my TSP account.

If "you just want the money" beware. It will be taxed (since it went in pre-tax), plus there is a 10 or 20% penalty on top of the tax.

Also, you're not reaping the benefits of interest on the money that has been removed - of course the last 2 years wasn't gang-buster as far as earning in the TSP go