Changes Coming to the TSP Withdrawal

A new summary of the Thrift Savings Plan appeared on their website in March of 2019. These are valid until the middle of September, but on that date, a new set of changes will be coming through because that will mark the start of the TSP Modernization Act. Here are some of the changes to expect when that happens, compared to what they are now:

Before September 14th, 2019

1.  For people who are 59 and a half years old, you are allowed one age-based withdrawal, which will, in turn, exclude them from taking a partial withdrawal once retired.

2. If the age-based withdrawal was forgone, then the employee is allowed a partial withdrawal after retirement. If this is taken, they are allotted only one more withdrawal, for the amount in full.

3. There is an option to take your money in monthly increments but cannot take any more unless it is a “cash out” situation and the fund is withdrawn in full. Once a year, the employee is offered the option of changing their monthly amount. No partial withdrawals are allowed if the retiree is taking monthly payments.

4. If the retiree’s TSP is comprised of Roth and traditional balances, any withdrawal must be taken equally between the two.

After September 15th, 2019

1.  For people who are 59 and a half years old, you are now allowed four age-based withdrawals. This will no longer exclude them from taking a partial withdrawal once retired.

2. It is now irrelevant if the age-based withdrawal was forgone or not, the employee is allowed as many partial withdrawals after retirement as they want, the only limitation being they must wait 30 days between transactions. If this is taken, they are allotted only one more withdrawal, for the amount in full.

3. There is an option to take your money in monthly increments, but you can also take it quarterly or yearly. The option to change that amount can be taken at any time, as can they be stopped or started. On top of this, you can still take partial withdrawals if desired.

4. If the retiree’s TSP is comprised of Roth and traditional balances, the option to choose with fund the money is removed from is now available.