TSP

John Grobe

One thing that did not change with the implementation of the TSP Modernization Act on September 15th is the requirement for FERS employees/retirees to secure the signed, notarized consent of their spouses for all withdrawals and loans. (There is no such requirement for CSRS employees/retirees.)

FERS participants will be running to find Notaries for every individual withdrawal; and one can be taken as often as every 30 days. They’ll need spousal consent every time they change the amount of their installment payments; and they can pretty much change them at will. The same spousal consent requirements will apply to age-based withdrawals for those employees who are 59 ½ or older (up to 4 per year can be taken).

Life expectancy table vs. fixed payments

Even though separated participants will have the ability to change the amount of their installment payments frequently, there is one thing they still won’t be able to do. If they start withdrawing their money by fixed dollar amount payments, they will not be allowed to later change to payments following the IRS life expectancy table. Likewise, if they start with payments based on the life expectancy table and then change to payments of a fixed dollar amount, they will not be able to switch back to payments following the IRS table.

When it comes to installment payments, I would expect monthly payments to be far more popular than either quarterly or annual payments. After all, our FERS or CSRS annuity and our Social Security are both monthly. It stands to reason that we would want our TSP payments to come monthly as well.

A note about COLAs

People and firms are starting to make predictions about how (or if) numbers will change for 2020. Kiplinger predicts that the COLA that would apply to Social Security, CSRS annuities, and those FERS annuities that are entitled to a COLA will come in at 1.6%. Consulting firm Mercer predicts that the elective deferral amount for plans such as the TSP will increase from $19,000 to $19,500 and the catch-up amount will move from $6,000 to $6,500. However the “finance buff” blog says the amounts will remain the same. We’ll know for sure in October; that’s when the new numbers will be announced by Social Security (the COLA) and the Internal Revenue Service (the contribution amounts).

Read more about COLAs – Federal Cost of Living Adjustments, at ask.FEDweek.com