The TSP Modernization Act (H.R. 3031) was signed by the President November 17, 2017. This update, one of the first since the TSP was established, provides users with additional options to manage their invested funds, including the ability to make multiple post-separation partial withdrawals and to make multiple in-service age-based withdrawals once the participant has reached the age of 59 ½.
Under this bill many additional options will be available making it more attractive for TSP participants to keep their funds in the TSP after retiring. Dr. Donna Day , a new contributor to our retirement planning site, summarized the changes in an article she wrote on November 8, 2017 titled “Proposed Additional Withdrawal Options for TSP Participants .”
Currently, upon separation from Federal services, if an account is vested and has more than $200, the entire account can remain in the TSP until the year following the year the participant turns 70 ½. A participant has two options for withdrawing, either partial or full withdrawals. A partial withdrawal allows participants to make a one-time-only withdrawal and leave the remaining balance until a later date. A full withdrawal can occur by taking the funds all at once, over a period of time, or through a purchased annuity that will pay the participant over the remainder of their life. Once a separated participant makes an election, the election cannot be changed. Age-based in-service withdrawals occur once the participant has reached age 59 ½ and is an active Federal employee. Currently, a participant may only take one age-based in-service withdrawal during the time they are actively employed. Taking an in-service withdrawal prohibits the participant from taking a post-separation partial withdrawal.
These changes won’t go into effect immediately. The Executive Director of the Federal Retirement Thrift Investment Board has up to two years to establish the necessary regulations to carry out the amendments prescribed in HR 3031 . We will add the new options to our TSP pages  coincident with the release of the new regulations by the executive director.
Request a Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections.
Helpful Retirement Planning Tools / Resources
Distribute these FREE tools to others that are planning their retirement
- TSP Information 
- Retirement Planning Guide 
- Master Retiree Contact List  (Important contact numbers and information)
- 2018 Leave and Schedule Chart  (Excel chart tracks all leave balances. Use this chart to set target retirement dates.)
- Annuity Calculator (FREE Excel chart estimates annuity growth)
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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