The new Thrift Savings Plan rules went into effect today, allowing plan participants greater flexibility for withdrawal options. These changes are associated with the passage of the TSP Modernization Act (PL 115-84) in response to TSP surveys indicating this need.
Prior to the passage of this bill, plan participants were limited to one in-service partial withdrawal after age 59.5 or a partial post-separation withdrawal. In fact, post-separation participants who attained the age of 70.5 were required to make a full withdrawal. Now in-service participants can make up to 4 (at least 30 days apart) per year and post-separation participants can take unlimited withdrawals (at least 30 days apart) and they are no longer required to make a full withdrawal at age 70.5.
Post-separated participants can now make monthly, quarterly or annual withdrawals and can start, stop or alter installment payments at any time. Prior to the new bill, participants who have a traditional and a Roth TSP account could only make pro-rata withdrawals from the two accounts. Now it is possible to select a particular account to complete the withdrawal.
The changes brought about by the TSP Modernization Act (PL 115-84) have created a much more workable platform for federal employees to access their retirement savings.