Our team of federal employee benefits consultants, case managers and attorneys have extensively reviewed the federal government’s changes coming in the Thrift Savings Plan (TSP) Modernization Act and we’re excited to share what we’ve learned. The Office of Personnel Management (OPM) will implement these new regulations to all new, current and former federal employee TSP accounts, effective on September 15, 2019. These new regulations will allow federal employees greater access to their savings in a variety of ways.
This is great news for those who are currently in service or are separated and have a TSP balance, as these changes will be applied to your account as well! To help simplify the upcoming changes, we have outlined the main points of the TSP Modernization Act below.
- Only one early withdrawal allowed before separation
- Only one withdrawal allowed post-separation
- Withdrawals only paid out in quarterly installments
- Paper-based election forms and withdrawal applications
- If no full withdrawal was made before age 70 ½ then the account is considered “abandoned”
- After age 59 ½ up to 4 withdrawals can be made per year prior to separation
- Unlimited withdrawals allowed post-separation as long as they are 30 days apart
- Withdrawals can be paid out in monthly, quarterly, or yearly installments
- New online portal for elections and withdrawals
- Accounts will no longer be considered “abandoned” at any time
We often have clients and prospective clients ask us about withdrawing funds from their TSP accounts in order to retain our services and how to avoid costly mistakes when doing so. Previously, the restrictions on withdrawals made utilizing these funds a difficult prospect. However, the updates to Thrift Savings Plan withdrawals will allow you to use your federal retirement savings when you need them most.
You can find a more details on the TSP Modernization Act here
We are always happy to provide assistance and resources to federal employees, and we hope this information makes clear the new rules surrounding your account. If you have any further questions, always feel free to reach out to our office.
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