The TSP has proposed rules to carry out the upcoming changes in withdrawal options for both current and separated participants, adding some new details to the changes set to take effect September 15.

Regarding post-separation withdrawals, one major emphasis is to explain the new policies regarding installment payments that will allow an account holder to elect to receive installment payments annually or quarterly in addition to the current monthly option and to change the frequency of the installment payments at any time rather than just once a year.


The option to make a one-time election to change from payments calculated based on life expectancy to fixed dollar amount payments will continue, as will the policy that once a participant makes an election to receive fixed dollar installment payments, he or she may not switch to life expectancy based payments, the notice says. Also, someone receiving installment payments could stop them at any time without having to receive the remainder of the account in a final withdrawal and “may elect to receive some or all of his or her remaining account balance in the form of a single sum payment, an annuity, or a combination of these options.”

The rules also address a consideration for the upcoming policy that those who have both traditional and Roth balances will be able to designate withdrawals from one or the other in addition to the prorated withdrawals that are now the only option. For someone who elects to receive installment payments from only one type of account, “payments will automatically continue from the non-elected balance once the elected balance has been depleted unless the participant elects to stop or change installment payments.”

The rules also clarify that a participant may only have one installment payment series in place per account at any given time.

While the TSP previously had said that account holders will be allowed an unlimited number of post-separation partial withdrawals, so long as they are at least 30 days apart, the rules clarify that those with more than one account—one from civilian federal service and one from military service—must make separate requests from each account and the 30 day period will apply separately to each.

Further, the end of a prior policy that a participant must make a final withdrawal decision by the April 1 after turning age 70 ½ means that the TSP will no longer shut off required minimum payments that apply starting at that point, which it traditionally has done when someone fails to make that decision by that deadline.