The TSP Modernization Act Now Has a Set Start Date

As reported on the TSP website itself, the new changes under the TSP Modernization Act are now set to begin on September 15, 2019.

While the timeline had been laid out previously, this announcement finally answers the long-standing question of “when” will these changes officially go into effect.

The announcement also had other new information in it directed and HR and payroll employees about when and how people can take hardship withdrawals while they are actively enrolled in the service.

Beginning on the start day of September 15, anyone in the TSP who is currently taking withdrawals for financial hardship while still actively in service was previously disallowed be able to put money into the TSP. That is no longer the case, and the TSP participant can resume their normal contributions even before they finish with the standard suspension period of six months.

Anyone who is receiving hardship pay on that crossover date of September 15 will receive a notice from the TSP, letting them know they can once again begin contributing if desired. It will not be automatic and have to be done by the participant.

The TSP Modernization Act makes multiple other distinct changes for government workers who have invested in the Thrift Savings Plan. Currently, TSP participants can only take a single age-based withdrawal out after their 59 and a half birthday, or a single departure from the fund should they move on to other employment away from the federal government.

For those working past the age threshold of 59 and a half, the TSP Modernization Act would let the employee now take out multiple age-based withdrawals. The same is true for former employees who have begun working elsewhere. The TSP Modernization Act also would allow the employee to make payments quarterly or yearly, and enables the employee to change their withdrawal schedule to be amended throughout the year.