NTEU has heard from many members over the years about the stringent withdrawal rules of the Thrift Savings Plan (TSP). As a member of the Employee Thrift Advisory Council, NTEU has raised the issue many times. This year, with bipartisan support in the Senate, a bill has been introduced which would allow active federal employees to make multiple age-based withdrawals from their TSP accounts and to remain eligible for partial withdrawals once they leave government as well. Individuals who have left government could make multiple partial post-separation withdrawals. The bill also would allow those receiving monthly payments to change the amount of their payment at any time—instead of only once per year–and they could change the frequency of payments as well.
In 2013, TSP participants who no longer worked for the federal government transferred $9 billion out of the TSP to other institutions. According to a TSP-conducted survey of those participants, 27 percent cited a desire for greater flexibility with payments and withdrawals.
The withdrawal rules have not been changed since the TSP was established in 1986 and are now outdated, according to the board. Under the current statute, federal employees who wish to make age-based withdrawals can only do so once while they are employed, and then they cannot make a partial withdrawal once they leave government. Those who have left government and have not made any age-based withdrawals can make one partial post-separation withdrawal, but then must move to full withdrawal options.
NTEU supports this bill and will seek swift passage of the legislation. It will take the Thrift Board some time to retool their systems to change the withdrawal rules, and the bill must first be enacted.
We will keep you informed on developments regarding TSP withdrawal options.