I was recently writing about qualifying life events (QLEs) as they apply to most federal benefits and could not find a list of QLEs as they apply to the TSP posted on the TSP website. Qualifying life events are situations that allow you to change your enrollment for a specified period outside of an open season. Though there are more than the list below for some federal benefits, these five items are considered QLEs for all federal insurance and allow a participant to change their enrollment outside of an open season if it is done up to 30 days prior to or within 60 days after the event.
• Death of a spouse;
• Birth of an eligible child;
• Adoption of an eligible child.
The Thrift Savings Plan is not a type of insurance that has recurring (e.g., FEHB) or rare and sporadic (i.e., FEGLI) open seasons that allow one to change their health plan or their enrollment status. It is more like federal retirement systems (FERS and CSRS) where once you’ve enrolled, you need do nothing more.
Nonetheless, because we have the ability to change both our contribution allocations, including the amount that we contribute, (as often as we want) and our account balances (up to two times a month, with exceptions), we have even more opportunity to adjust our TSP than we do our insurance benefits. We simply need to pay attention to our situation, take the time and make the effort to keep up-to-date with our TSP.
The Thrift Savings Plan does have ages (as opposed to events) that are important. Upon attaining those ages, we are allowed to do certain things (e.g., take penalty free distributions) or are required to do certain things (e.g., take minimum distributions). Here are those ages and what you may (or have to) do when you reach them. I have included ages that apply to other important retirement benefits as well.
Age 55 (50 for special category employees) – If you separate in (or after) the year in which you reach these ages, you will be able to withdraw from your Thrift Savings Plan without facing the 10% early withdrawal penalty.
Age 59 ½ – At this age your withdrawals from your Roth TSP will become qualified (as long as you’ve had the Roth balance in your account for five or more years) and earnings will not be taxed. Any withdrawals from your Roth TSP balance prior to 59 ½ will result in the part of your withdrawal that comes from earnings being taxed for federal income tax purposes. Also, at this age you will be able to take penalty free withdrawals from any Individual Retirement Arrangements (IRAs) that you have.
Age 62 – The Retiree Annuity Supplement ends for FERS employees (CSRS employees are not entitled to it in the first place). Also, you will be eligible to apply for Social Security retirement benefits, though you are not required to.
Age 65 – You will become eligible for Medicare. It makes sense to apply for Part A. If you’ve worked past the age of 65 at your federal job, or at any job that provides you with health insurance, you can delay your decision on whether or not to apply for Part B until after you have retired. If you’re retired at age 65, you should make your decision as to whether or not to apply for Part B. If you are retired military and covered by TRICARE, you will be required to elect Medicare Part B at age 65, whether you are working or not.
Social Security full retirement age – this will be age 66 or 67 for most of us. You are no longer subject to the Social Security earnings test.
Age 70 – If you haven’t yet applied for Social Security, you should do so now, as your benefit will not continue to receive delayed retirement credits after this age.
Age 72 – At this age you must begin taking required minimum distributions from most of your retirement accounts. This does not include Roth IRAs but does include your TSP unless you are still working at your federal job.