The TSP has sent a notice to agencies previewing a policy change to take effect September 15 in which employees who take financial hardship withdrawals will no longer have to wait six months before investing again.

The notice tells agencies to inform employees who have taken a financial hardship in-service withdrawal of the upcoming change and also tells agencies to make any changes needed to their payroll systems to accommodate the change.


Any participant who received a financial hardship in-service withdrawal and is currently suspended from investing will be able to re-start TSP investments effective September 15, 2019, even if they have not completed the six-month period by then, it said. They will receive a notice from the TSP alerting them that they can resume investing but restarting investments “is the participant’s responsibility.” They will need to do that through their agency’s pay system or by submitting a new TSP-1 election form.

The change does not affect the other form of in-service withdrawals, age-based withdrawals allowed without a tax penalty for employees age 59 ½ or older. Those who take that form of withdrawal always have been allowed to continue investing. The current limit of one such withdrawal lifetime will be ended at the same time, however, among other withdrawal changes.

Read more on TSP Loans and In-Service Withdrawals at ask.FEDweek.com