More TSP Changes Coming Soon

July 15, 2019

[vc_row][vc_column width=”2/3″ el_class=”section section1″][vc_column_text]The TSP Modernization Act is going into effect soon, and that means lots of changes to the fund are forthcoming.

As of mid-September of this year, the TSP’s governing body, the Federal Retirement Thrift Investment Board, has a few new rules set to go into effect. This is in addition to a few other proposed rules the Board is currently drafting.

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One of the proposed new rules involved withdrawals after you leave government work. Previously there were many restrictions when it came to when you could take your money and how much you were able to take, but the Federal Retirement Thrift Investment Board wants to do with that, allowing for as many withdrawals as the former employee wants, from a lump sum, incremental payouts, annuity, or any combination therein. The only restriction, according to the Board, would be that the beneficiary would only be permitted “one installment payment series in place per account at any given time.”

There are other payment options too that were not previously available. Recipients can now collect on a yearly or quarterly schedule, as well as the previously permissible monthly payment option that existed before these new rules. Folks in the TSP are also allowed to amend the rate and amount they collect in these payments at any time in the year, a change from the limited options that you were able to make if you chose to take your money in fixed payments. TSP recipients can also stop collecting payments at any time, which they previously weren’t allowed to do unless they took the remaining money in their fund out and closed their account. If stopping monthly payments, you’d have the option to do a lump sum or annuity, or restart your monthly checks again.

And lastly, rules around the age-based withdrawals for people who were 59 and a half years of age or older who are still working have changed, and they may be allowed up to four age-based withdrawals per account per any given year. Previously, you were only allowed on age-based withdrawal, in which you had to take the money you were tapping into in a lump sum payment.[/vc_column_text][/vc_column][vc_column width=”1/3″][vc_single_image image=”36156″ img_size=”292×285″ style=”vc_box_shadow”][/vc_column][/vc_row]