Bipartisan TSP Withdrawal Flexibilities Bill Heads to President for Signing

Yesterday, the Senate passed HR 3031, the TSP Modernization Act of 2017, cosponsored by Representatives Elijah Cummings (D-MD) and Mark Meadows (R-NC). It had previously passed the House on October 11th. The bill increases flexibilities in withdrawing your TSP funds.

604px-us-thriftsavingsplan-logo-svg_As part of the Employee Thrift Advisory Council, NTEU has raised the issue of stringent withdrawal rules many times. This year, with bipartisan support in the House and the Senate, championed by Senators Portman (R-OH) and Carper (D-DE), legislation has been passed that will 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. Additionally, those who have left government will be able to make multiple partial post-separation withdrawals. Those receiving monthly payments will be allowed to change the amount of their payment at any time—instead of only once per year—and they will be able to 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. Under the current statute, federal employees who wish to make age-based withdrawals can only do so while they are employed, and then they cannot make a partial withdrawal once they leave government. Those who have left the government and haven’t made any age-based withdrawals can make one partial post-separation withdrawal, but then must move to full withdrawal options.

Passage of this legislation is a victory for NTEU members. The Thrift Board now has two years to produce regulations to implement these changes. NTEU will work with the Thrift Board to try to shorten that timeline.