Federal Employees News Digest

Changes Coming to TSP Withdrawal Options

As a result of the passage of the TSP Modernization Act of 2017, Thrift Savings Plan (TSP) participants will have more withdrawal options from their TSP accounts. The new withdrawal options will begin Sept. 15, 2019. This column discusses these changes and how they benefit TSP participants.

Among the newest TSP withdrawal options, a TSP participant will be able to start, stop or change installment payments and make additional partial withdrawals whenever a participant needs to. Even with these changes, TSP participants will continue to benefit from the TSP’s low administrative fees.

The following table summarizes the new rules affecting TSP withdrawal options, together with the current rules:

Those TSP participants who have been receiving monthly payments or who have taken a partial withdrawal prior to Sept. 15, 2019 when the new rules take effect, will be able to take advantage of the new withdrawal rules.

It should be noted that spousal TSP beneficiary participants (the spouses of deceased TSP participants who had TSP accounts established for them) have the same withdrawal options as separated TSP participants under the new rules taking effect on Sept. 15, 2019.

Finally, it would be a good idea for TSP participants to review their TSP fund allocations between now and Sept. 15, 2019. Logging onto My Account (https://www.tsp.gov/tsp/login) gives a TSP participant access to manage a portfolio, send secure messages to TSP representatives, and complete certain transactions.

After logging onto My Account, a TSP participant may want to consider taking these actions:                  

(1) verifying that his or her mailing address is correct;

(2) choosing a Lifecycle (L) fund or a fund asset allocation appropriate to a TSP participant’s financial goals and risk tolerance;

(3) verifying that a beneficiary designation has been made and that the designation is current and up-to-date; and

(4) becoming familiar with the online tools and calculators that are available to TSP participants.

Edward A. Zurndorfer is a Certified Financial Planner, Chartered Life Underwriter, Chartered Financial Consultant and IRS Enrolled Agent in Silver Spring, MD.  Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, located at 833 Bromley Street Suite A, Silver Spring, MD 20902-3019 and telephone number 301-681-1652.  

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Edward A. Zurndorfer Certified Financial Planner
Mike Causey Columnist
Tom Fox VP for Leadership and Innovation, Partnership for Public Service
Mathew B. Tully Legal Analyst

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