Changes to Expect on TSP in 2019

2019 is only a few months away, and everyone is eager to see the changes that it will bring to the Thrift Savings Plan. These changes were expected to be implemented in 2017 but ended up in delays, and now employees are looking forward to seeing what 2019 holds for them. It is a gamble whereby some of the anticipated changes might happen while some might not take place. Some are a guarantee, and there is a certainty that they will take place. For example, the Thrift board is expected to execute the TPS Modernization ACT which is believed to take place by September and latest by November 2019.

This execution aims to make the withdrawal from the TPS easier and more flexible which will help retired workers access their money efficiently. This is by giving the employees more control and freedom over their retirement accounts and this step is expected to help the government to participate in the TPS program and improve the operations of the current retirement services.

Today the military personnel and the federal workers can save up to 18,500 dollars which are 500 dollars more than in 2017. Some of the savers can even make extra catch-up contributions. For example, for retirees who or 50 years or older, their plans may allow them to contribute up to $6,000 additional catch-up contribution which is equivalent to $24,500 of their total grant. Even better; military members who receive a tax-free income can save up to $55,000 in contributions.

There is a 3% inflation expectation which could push the contribution saving amount from 18500 dollars to 19, 000 dollars. The catch-up amount has been constant for some years, but there is a huge possibility that this amount might rise to $6,500 by 2019. The IRA phase-out amounts, on the other hand, might increase by up to two thousand dollars.

What are some of the things that might change or happen as a result of the implementation of TPS Modernization ACT? Congress might reduce the rate of return of the G Fund as they have been proposing over a couple of congress sessions.

Employees who are at least 59.5 years old will be allowed to make several or multiple TPS withdrawals

Employees will have a choice to decide if they want to withdraw their savings from traditional balance, Roth balance or both

Workers who are over 70.5 years old will be allowed to make partial withdrawals rather than mandating them to make full withdrawals or partial minimum distribution annually

They will be permitted to select between annual or quarterly payments thus letting them make frequency changes at any time

The more workers save now, the more they will have secured after retirement, and in 2019, the expected changes are meant to make both living and investing in a TPS easier for everyone. The government hopes to participate more and eliminate the bureaucracy associated with the withdrawals from TSP accounts to enhance convenience for workers since without the employees’ participation, then this system is bound to fail.

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