TSP Modernization Act Passes Congress
After successfully passing the Senate and the House, the TSP Modernization Act (H.R. 3031) is now in the process making its way to Trump’s desk at the White House. What we don’t know for sure is if the President will be willing to sign the request into law, because as of now, nothing concerning the bill has been listed on the White House website.
The bill was passed through the Senate without amendment. This particular bill is important for federal employees. It may change the existing rules that allow only one partial post-separation withdrawal for federal employees that are separated from the federal workforce (meaning annuity payments, a stream of monthly payments, or a lump-sum payment). Insead the plan is to offer an option that will give room for multiple, partial post-separation withdrawals, allowing retirees the access to their account for their respective individual needs at any time.
For employees over 59-and-a-half years of age that are still in service, the TSP Modernization Act would give room for mulitple age-based withdrawals. The bill also would allow for the election of annual or quarterly payments, and could also permit occasional withdrawals that can be changed during the year at any point.
TSP participants under the current law have been limited only to one withdrawal from their accounts upon reaching 59-and-a-half years while in the federal service. Participants who are no longer working in the federal service can make only one withdrawal from a portion in their account balance (post-separation withdrawal).
The bill directs the body that oversees the TSP, the Federal Retirement Thrift Investment Board (FRTIB), to order necessary regulations to carry out these new changes no later than two years after it is passed and becomes law.
If you have questions on in-service TSP withdrawals or withdrawals after you have retired, you may want to consider contacting a financial professional who specializes in federal retirees for guidance.