Retirement & Financial Planning Report

Two senators who have been leaders in expanding retirement savings opportunities are proposing to ease the required distribution rules applying to such accounts including the TSP.

The “required minimum distributions” requirement begins in the year after the account holder turns 70 ½ and mandates annual withdrawals of amounts based on life expectancy; failure to take out at least the minimum results in a tax penalty.


That provision, part of the tax code and thus applying to the TSP and 401(k) and similar accounts, has been criticized as forcing retirees to withdraw money and give up its tax-favored status even though they might not need it for living expenses.

As House members in prior years, Sens. Rob Portman, R-Ohio, and Ben Cardin, D-Md., had been instrumental in enhancing such savings programs, including by substantially increasing the amount that can be invested each year in an account.

Their plan would: exempt from the minimum distribution requirement all individuals with $100,000 or less in aggregate retirement savings; increase the age at which individuals subject to the requirement must begin withdrawals to 72 in 2023 and 75 in 2030; reduce the tax penalty for failing to take required withdrawals; and base withdrawals on updated life expectancy figures that would lessen the required amounts.

They introduced the plan late in the prior Congress and are expected to push for it during the present Congress.

Read more on taxes on federal employee benefits, including required minimum distributions at