New Thrift Savings Plan Rules Could Affect You

Nov 15, 2018


There will be significant changes made to the Thrift Savings Plan rules. Effective September 2019, these changes will focus on withdrawal options that have previously lacked flexibility. Because of that, many have looked for alternative options that offer more accessibility and control to their retirement savings.

Changes to Thrift Savings Plan Rules

Here are the changes to all thrift savings plan rules you can expect to see:

Multiple Age-Based Withdrawals

Current: Participants have the opportunity for only one partial withdrawal in-service or post-separation.

Upcoming: For that 59 ½ or older, multiple age-based in-service and post-separation partial withdrawals will be allowed. You can’t make more than one every 30 days, and you’re limited to 4 per calendar year.

Traditional, Roth, or Both for Withdrawals

Current: If you have both a Traditional and a Roth balance, the only way to take a withdrawal is on a pro rata basis.

Upcoming: You can choose whether your withdrawal comes from your Roth balance, Traditional balance, or a proportional mix of both. You can still do a pro rata basis. This applies to all types of withdrawals.

Required Minimum Distributions (RMD’s)

Current: Full withdrawal election is required after you turn 70 ½ and are separated from service.

Upcoming: You will no longer be required to make a full withdrawal election after you turn 70 ½ and are separated. You will, however, still need to have IRS RMD’s.

Installment Payments—Monthly, Quarterly, Annually

Current: Only monthly installment payments are available and only you can change the amount of your payment once during Open Season.

Upcoming: If you’re separated, you’ll also be able to choose quarterly or annual payments, and you’ll be able to stop, start, or make changes to your installment payments anytime.

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