TSP Changes Starting This September
New changes to the Thrift Savings Plan or TSP go into effect today (September 15th). This article is going to run through these changes so you can be educated and investigate all of your new options further.
Once you retire or leave federal work, there will be more options coming as to partial withdrawals from your TSP account. If you are still employed and over the age of 59.5 years old, then you have the option of taking up to four withdrawals from your TSP annually. This is a significant change as, before this, in-service withdrawals were limited to only one for the rest of your life, and you had to choose between taking that after age 59.5 while you were still employed, or after you retired.
Additionally, these four withdrawals can be taken out of any TSP account you may have, in any percentage, whether it be your Traditional account or your Roth account. Again, this is a significant change from your options previously, which stipulated that if you were to make a withdrawal, it had to be pulled out of both your Traditional and Roth accounts in equal parts, meaning if you wanted to take a 10,000 dollar withdrawal, 5,000 dollars had to come from each.
While the age of 70.5 marks the point in which you’ll be forced into collecting required minimum distributions from your TSP (for tax purposes) you no longer have to withdraw all your money at that time, as you previously had to do, lest the government mark the account as abandoned and keep your investment. Now, your money can remain invested in the TSP as long as you like.
For retirees, you can set up periodic payments at intervals of either yearly, each quarter, or once a month, and you will have the option to change that at any time, as well as halt payment, or restart it again. Before, the TSP would only allow for monthly payments for retirees, with an enrollment period of only three months at the end of the year to make any necessary changes for the next fiscal season.
These changes give you much more freedom to control your money, but also come with risks, so it is advised to seek out tax and financial help if you have any questions about the new TSP.
