There are several dates to remember between the middle of December and the beginning of 2019 as it applies to the TSP.
For those who are receiving monthly payments from the TSP, December 15, 2018 is the deadline for the TSP to receive a request for an annual change in the amount of monthly payments. If you’re receiving monthly payments and want to change them, you should use Form TSP-73, Change in Monthly Payment Amount. You should have received that form in the mail in October. The TSP-73 does not allow you to change your federal income tax withholding – you will have to use Form TSP-78, Monthly Payments Maintenance for that.
This is the last year participants will have the December 15th deadline. With the implementation of the TSP Modernization Act (scheduled for 10/01/2019) participants will be able to change the amount of their monthly payments at any time.
On December 17, 2018, all monthly payments that were normally scheduled to be made between December 18 and December 31 will be made. For federal income tax purposes, these payments will be reported to the IRS as 2018 income. This means that many of you will be receiving your December payment earlier than usual. Why the early payments? To ensure that all required minimum distributions (RMDs) are made by the end of the year.
TSP participants who are over 70 ½ years old are required to take a certain amount (a required minimum distribution) from the TSP each year unless they are still working at their federal job. Some (not too many, I’m sure) of these participants did not have enough taken from their account in monthly payments over the course of the year to meet their RMD requirement. The TSP will identify those who have not taken out enough money and will, over the last two weeks of December, make distributions so that all affected participants will have taken out the correct RMD amount. This allows them to avoid the 50% penalty for failing to take a required minimum distribution.
The TSP is closed on Christmas Day, December 25, 2018 and on New Year’s Day, January 1, 2019 and any transactions that would have been processed those days will be processed the following business day.
See also, TSP Withdrawals at ask.FEDweek.com