“Fact Sheet 10, Questions and Answers about Changes to TSP Withdrawal Options” has been updated by the Thrift Board. Originally issued in December, the current update to this Fact Sheet adds details on the changes that will take place during the implementation of the TSP Moderation Act. The deadline for the Board to institute the changes is November 2019.
You are currently only allowed one partial withdrawal from your TSP, but several changes were made regarding this.
Once you reached the age of fifty-nine and one half, you could be allowed to take up to 4 age-based in-service withdrawals per calendar year. You will no longer be prohibited from taking a partial withdrawal once you have separated because of taking an age-based withdrawal. No changes were made so far as in-service hardship withdrawals are concerned.
The number of partial withdrawals you are allowed to make has no limit after you are separated from federal service, as long as you do not take them more often than every 30 days. Even if you already started taking periodic payments from your account, you should be permitted to make partial withdrawals.
You would be given the option of either taking a withdrawal from just your traditional balance or just your Roth balance. The “Roth tax trap” is eliminated because of this for those who withdraw from their TSP before the age of fifty-nine and one half. This exact alteration was not part of the TSP Modernization Act. However, the Thrift Board decided to make it nonetheless.
“Installment payments” will be the new term for monthly payments, and they will shift to being either quarterly or annual. You may make changes any time throughout the year to the frequency and amount of installment payments. The fact that, once payments of a particular dollar amount are elected, you won’t be able to change to the IRS life expectancy table option, will not change. At any time you are permitted to discontinue your installment payments without needing to “cash out” or roll over your account.
As things progress, the Thrift Board tells us that they will keep making updates to Fact Sheet 10.