FEDweek

TSP on Withdrawal Changes: We’re Working on It

The TSP says it is working to carry out changes in withdrawal policies recently enacted into law, although there is no set timeframe for them to be available to investors.

The law gives the TSP up to two years to carry out changes including allowing multiple in-service age-based withdrawals after age 59 ½; multiple post-separation withdrawals; and new options for structuring “substantially equal payment” withdrawals. “We are very aware that our participants are very anxious to have access to this new flexibility and we are moving out expeditiously to provide it to them,” a TSP spokeswoman said in an email.

She said that the TSP has assembled a project team but doesn’t have a timetable for steps to carry out the changes– including programming changes, regulatory changes, communications and potential rewriting of the forms involved. The law for example gives the TSP discretion to limit the number of post-separation withdrawals, although the intent of Congress was clearly to make the number much higher than the one that currently is allowed.

“While we are in the early stages of planning, one of the things we are considering is whether chunking this out (working on separated participants first and then in-service/over 59 ½ second) provides flexibility to our participants faster,” she said.