Posted on Wednesday, 8th November 2017 by

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Thrift Savings Plan contributors may see more flexibility when it comes to making withdrawals from their TSP as part of their retirement plan. The TSP Modernization Act will allow multiple-age based and post-separation withdrawals from their TSP accounts; the bill has gone to the Senate for a vote. The TSP Modernization Act of 2017 (H.R. 3031) was passed by the House of Representatives providing long overdue flexibility surrounding Thrift Savings Plan participants. This bill offers greater control for retirement planning. Introduced by Representatives Elijah E. Cummings (D-MD), and Mark Meadows (R-NC), the Act provides additional withdrawals and offers quarterly or annual payments throughout the year.

Specifically, if the current version of the bill is passed, participants can:

– Make multiple age-based and post-separation withdrawals

– Revise timing and amounts of periodic payments

– Choose to combine partial withdrawals or annuity with periodic payments (Smith, 2017)

Currently TSP participants are limited to only one withdrawal from their TSP account while in federal service upon reaching the age of 59 1/2 and those leaving federal service could only make one withdrawal as a portion of their  balance in their TSP account. Also, the current system has many restrictions which forced participants to transfer monies from their TSP. However, if the new bill is passed participants will enjoy additional opportunities and financial independence before and during their retirements, which will also encourage them to keep their money invested in their TSP account (Klement, 2017).

Overall, the bill provides greater flexibility to federal employees by giving TSP recipients additional access to their funds for a longer period. This will enable many participants to reap the benefits similar to those throughout private industry after federal service.  Many federal employees and annuitants were frustrated with the system and withdrew their funds from the TSP, rolling them into more expensive private sector plans. Now, however, the proposed increased flexibility and additional opportunities put TSP participants back in the driver’s seat to better manage their long-term financial future.

The Act was also supported by the Federal Retirement Thrift Investment Board and a myriad of government employee organizations like the National Treasury Employees Union (NTEU). All feel that the TSP’s current regulation were not effectively meeting the needs of a current, yet changing workforce. The changes, however, are much needed improvements as well as providing an incentive for participants to keep money in the TSP in the first place (Bradford, 2017).“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” (Burr, 2017).

Update (11-8-2017)

The Senate unanimously passed the bill and forwarded it to the the President for signature on November 8, 2017.  TSP participants won’t see plan changes until the Federal Retirement Thrift Investment Board finishes writing the new withdrawal guidelines. This should be completed by early February of 2018.


Bradford, K. (2017). TSP modernization bill introduced in house. Retrieved from:

Burr, J. (2017).  House passes TSP modernization act. Retrieved from:

Klement, J. (2017). NARFE applauds house passage of TSP modernization act. Retrieved from:

Smith, I. (2017). House passes TSP Modernization Act. Retrieved from:

White, E. (2017). House passes bill to give TSP participants more withdrawal options. Retrieved from:

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Disclaimer: Opinions expressed herein by the author are not an investment or benefit recommendation and are not meant to be relied upon in investment or benefit decisions. The author is not acting in an investment, tax, legal, benefit, or any other advisory capacity. This is not an investment or benefit research report. The author’s opinions expressed herein address only select aspects of various federal benefits and potential investment in securities of the TSP and companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that retirees, potential and existing investors conduct thorough investment and benefit research of their own, including detailed review of OPM guidance for benefit issues and for investments the companies’ SEC filings, and consult a qualified investment adviser. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.

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