Bipartisan Bill Paves the Way for More TSP Fund Withdrawals
Two senators introduced a bill to relax Thrift Savings Plan withdrawal restrictions on Thursday.
Federal employees who invest in the TSP withdraw more than $9 billion each year from the government’s retirement fund, partly due to its strict withdrawal rules.
Sens. Rob Portman’s (R-Ohio) and Tom Carper’s (D-Del.) TSP Modernization Act would allow federal retirees to make multiple post-separation withdrawals from the TSP instead of the two currently allowed.
“Making smart choices to prepare for retirement can be difficult, but everyone deserves to have financial stability at the end of their career,” Carper said in a statement. “The Thrift Savings Plan is a tool our hard-working federal employees count on to plan for their futures, but we need to make it work better for them.”
Introduced at the TSP’s request, the Carper-Portman bill would:
- Eliminate the restriction that participants cannot take partial post-separation withdrawals if they’ve already taken an age-based in-service withdrawal.
- Permit multiple post-separation withdrawals.
- Allow multiple age-based withdrawals while a participant is still working.
- Allow participants to stop monthly payments and elect to purchase an annuity while receiving monthly payments.
“The TSP has been instrumental in helping federal employees maximize their retirement security, and to mark the 30th anniversary of this critical savings vehicle this bill takes important steps to modernize this system to benefit them in the future,” said Portman.
The Congressional Budget Office has yet to score the Portman-Carper bill, but the senators project the bill, if passed, could achieve cost savings if it results in earlier, taxable withdrawals from the TSP.
Posted in General News