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The Thrift Savings Plan announced that expanded withdrawal options supported by NTEU and enacted into law last year will be available in September 2019.
The new flexibilities were added in response to investors who, after leaving the federal government, were transferring their money into IRAs rather than leaving the funds in the TSP because of limited withdrawal options.
Here are some of the coming changes:
• Multiple age-based in-service and post-separation partial withdrawals will be allowed for participants who are 59 and a half and older.
• Participants can choose whether the withdrawal should come from their Roth or traditional balance, or a proportional mix of both.
• Participants will no longer be required to make a full withdrawal election when they reach 70 and a half years old and leave the federal government.
• In addition to the option of monthly payments, separated participants can choose quarterly or annual payments, and can stop, start, or make changes to installment payments at any time.
Current rules for in-service hardship withdrawals will not change, except that there will be no suspension of contributions after a hardship withdrawal.
Along with the expanded withdrawal options, TSP is introducing new “wizards” on its website to help federal employees navigate the changes, check balances and suggest distributions based on the participant’s account.
The TSP will send participants information about the upcoming changes in February. In the meantime, learn more about the changes.