TSP: You may want to wait until September 15 or later to request your withdrawal so that you can take advantage of more flexibility. Image: Ground Picture/Shutterstock.com

The TSP has issued an updated fact sheet regarding the upcoming expansion of withdrawal options, including a promise of new “enhanced online tools” for participants.

As previously announced, the new options—some two years in the making after they were authorized by a change in law—will be effective September 15. The new notice adds that there will be a blackout on withdrawal requests September 7-14 to give the TSP time to finish processing withdrawal requests under the traditional policies before the policies change.


“You may want to wait until September 15 or later to request your withdrawal so that you can take advantage of more flexibility and use new, more efficient online tools to initiate your request,” it says.

Among the options for those retired or otherwise separated will be: to take lump-sum withdrawals as often as every 30 days; the choice of taking withdrawals totally from traditional or Roth balances in addition to on a prorated basis; the option to take installment payments quarterly or annually in addition to monthly; and the option to start, stop or change amounts of those payments at any time. Those options will also apply to “beneficiary participants”—spouses of deceased participants who’ve had accounts established for them—it adds, as well as to those already taking installment payments.

Also, a requirement that separated participants make a full withdrawal election by age 70 ½ will be eliminated, although the requirement to take at least minimum distributions after that age will continue.

For active employees, up to four age-based withdrawals without a tax penalty after age 59 ½ will be allowed for year rather than just one lifetime; and the six-month waiting period before resuming investments after taking a financial hardship withdrawal will be eliminated.

Says the notice: “At the same time as we roll out the new withdrawal options, we’ll begin using enhanced online tools to make the withdrawal process even more efficient. Instead of just providing you with a completed paper form to send in, our new online tools will allow you to complete at least part of the transaction online. In many cases you’ll still need to provide notarized signatures or other materials in paper form. But when that happens, you’ll be given only the necessary pages to complete and submit. When we receive those pages, we’ll be able to link them to the information you’ve already submitted securely online and complete your transaction. This will greatly reduce the chance of errors that could cause delays, rejections, or—worse—unintended withdrawals that can’t be reversed.”