FEDweek

TSP Withdrawal Bill Up for House Vote

The House is expected to vote this week to approve a bipartisan bill (HR-3031) to expand TSP withdrawal options, making those features more comparable to those in other retirement savings programs.

The bill would allow multiple partial withdrawals after separation, rather than just one, as well as multiple in-service “age-based” withdrawals after age 59 ½; the bill does not specify a maximum number but gives the TSP discretion to set limits. Currently only one of each is allowed, and those taking an age-based withdrawal lose the option of taking a partial withdrawal after separation.

It also would create more options for “substantially equal payment” post-separation withdrawals. Currently those payments must be taken monthly and the amount can be changed only once a year. Under the bill, those electing such withdrawals could choose quarterly or annual payouts as well, change the amount or stop payments at any time, or use the money remaining after such payments have started to buy an annuity or to take a lump-sum payment instead.

Approval by the House would shift the focus to the Senate, where a counterpart (S-873) has cleared the committee level.