Legislation has been introduced in the House of Representatives to allow federal employees to make multiple age based and post-separation withdrawal from their TSP accounts. The TSP Modernization Act of 2017 was introduced by Congressman Mark Meadows (R-NC) and Elijah Cummings (D-MD).
This bill allows participants to:
- Revise the timing and amounts of periodic payments
- Elect to combine partial withdrawals or an annuity with periodic payments
- Make multiple age-based and post-separation withdrawals
It would also eliminate automatic annuities as a default option in the absence of an election by participants.
Under the current law, TSP participants are limited to one withdrawal from their accounts while in service upon reaching age 59 ½ (age-based withdrawal) and participants who leave federal service can make one withdrawal of a portion of the balance in the account (post-separation withdrawal).
“Our bipartisan bill would better align the TSP with other retirement plans offered by the private sector and state and local governments, and it would encourage participants to keep their TSP accounts to take advantage of low administrative fees even after they retire or separate from federal service,” Cummings said. “I thank the Federal Retirement Thrift Investment Board for working with us on this common-sense bill to give TSP participants what they want: greater flexibility to withdraw money from their accounts, to address unexpected life events.”
This bill is like legislation introduced earlier this year in the Senate, The TSP Modernization Act. The bill has the support of the Federal Retirement Thrift Investment Board (FRTIB), National Active and Retired Federal Employee Association (NARFE), the American Federation of Government Employees (AFGE), and the National Treasury Employees Union (NTEU).