With the long-awaited broader withdrawal options in the TSP now in effect, the program has issued several reminders that the new policies apply as well to those who already have taken withdrawals under prior rules.

The new policies, which went into effect Sunday, affect post-separation withdrawals as well as the two forms of in-service withdrawals. In the former category, major changes include the right to take unlimited partial withdrawals (rather than just one per lifetime); the right to change amounts of installment payments at any time (rather than just between October 1 and December 15) and to receive them monthly, quarterly or annually (rather than just monthly); and the right to take lump-sum withdrawals while receiving installment payments.


In the latter category major changes include the right to take up to four age-based (after age 59 ½) withdrawals per year (rather than just one per lifetime); and the right to continue investing after taking a financial hardship withdrawal (rather than having to wait six months before resuming). For all withdrawals, individuals with both traditional and Roth balances will be allowed to specify which account to take money out of, or elect to take from both proportionately (as is now required).

Says a new TSP fact sheet, “If you had an account balance when the new rules went into effect, even if you had begun receiving monthly payments or had taken a partial withdrawal before then, you can take advantage of the new withdrawal options.”

Further, those who were in a waiting period after taking a financial hardship in-service withdrawal as of Sunday can now begin investing again immediately; and those who had failed to make a withdrawal election after reaching age 70 ½ and whose accounts were temporarily frozen until they made a full withdrawal election required under the prior policies now do not have to make such an election and they have the standard withdrawal options available to them.

The guidance also notes that beneficiary participants—spouses of deceased TSP participants who’ve had accounts established for them—can make all the same withdrawals as separated TSP participants.