New and loosened policies on withdrawing funds from TSP accounts are now only a month away—they take effect September 15—after being under consideration and in the implementation stage for several years.

The new policies are largely a response to the large numbers of participants who close out their accounts after separation–by transferring the money into an IRA or other eligible retirement account—rather than leave the money with the TSP. Surveys showed that a major reason was dissatisfaction with the limited withdrawal options in the TSP in comparison with those other investment vehicles (the TSP’s limited choice of investments is another reason, which the new policies do not address).


In recent emails and letters to account holders, the TSP called attention to the upcoming changes and said that “this is a great time” for them to review their accounts, validate their contact information and add new login security features such as two-factor authentication for signing in, and become familiar with online tools.

For now, it added, its online and other materials reflect the traditional policies, most of which have been in effect since the program started more than 30 years ago.

The TSP previously suggested that account holders close to making a withdrawal choice might want to wait until after September 15, when it will make available new online features designed to explain the options and reduce the chances of mistakes in electing them. Also, there will be a blackout on withdrawal requests September 7-14 to give the TSP time to finish processing requests under the traditional policies before the policies change.

The new withdrawal options will be available to those who already have taken some money from their accounts. Further, a change to financial hardship-based in-service withdrawals—ending the six-month ban against new investments by those who take those withdrawals—will apply to those in such a period as of the effective date, wiping out any waiting time remaining for them.

Subscriber report: TSP Withdrawal Options: Now, and Coming Soon