The House on October 11 passed the Thrift Savings Plan Modernization Act, which would give federal employees enrolled in the government retirement plan greater flexibility in withdrawing funds.
“Employees have a lot of options when investing their TSP funds, but when it comes to withdrawing the funds, the options are much more limited,” said Rep. Steve Russel, R-Okla., on the House floor.
“Current statutory rules preclude employees from taking multiple post-service partial withdrawals and cannot request a partial withdrawal or annuity purchase after making a periodic payment without election. S70-and-a-half. The rules restrict an employee’s ability to make multiple in-service agtatutory rules also require the purchase of an annuity if a participant fails to make an election by age e-based withdrawals.”
The TSP Modernization Act, which was introduced by Reps. Elijah E. Cummings, D-Md., and Mark Meadows, R-N.C., would allow participants to time multiple, partial post-separation withdrawals to their specific needs as well as multiple, age-based withdrawals for working participants older than 59-and-a-half.
“This bill will provide the proud men and women who serve this nation in the civil service and in the military greater control over their own retirement savings and the ability to plan responsibly for their future,” said National Active and Retired Federal Employees Association President Richard G. Thissen.
“The current restrictive TSP withdrawal options are one of the leading reasons why participants transfer their money out of the TSP, despite the fact that the TSP provides sound investment options at a low cost. The withdrawal options provided in this bill will create opportunities for participants before and during retirement, provide greater financial independence and encourage participants to keep their money in the TSP.”
“I’m proud to be a cosponsor of this legislation, which will help modernize the federal government’s thrift savings plan by aligning it with current practices for private-sector 401(k)’s,” said Rep. Eleanor Holmes Norton, D-D.C. “I thank ranking member Cummings and Chairman meadows for the important work that will give TSP participants more flexibility in making withdrawals from their accounts.”
A companion bill was introduced in the Senate in April 2017, and passed through the Senate Homeland Security and Government Affairs Committee in July.
“NARFE applauds the House of Representatives for moving this commonsense, bipartisan measure forward, and I call on the Senate to swiftly follow the House’s lead,” said Thissen.