Legislation Could Loosen Restrictions on TSP Withdrawals
The stringent withdrawal rules on the Thrift Savings Plan (TSP) have affected NTEU members for years. This year, with bipartisan support in the Senate, a bill has been introduced allowing active federal employees to make multiple age-based withdrawals from their TSP accounts. Supported by Senators Rob Portman (R-Ohio) and Tom Carper (D-Del.) employees would still remain eligible for partial withdrawals once retired. The bill also allows employees receiving monthly payments to change the amount and frequency of their payment at any time instead of only once during the year.
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, 27 percent of employees 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 cannot make a partial withdrawal once they leave government. Employees who have left government and not made any age-based withdrawals can make one partial post-separation withdrawal, but then must move to full withdrawal options. The withdrawal rules have not been changed since the TSP was established in 1986.