For those who are drawing on their Thrift Savings Plan account as needed, this change adds much more flexibility to their choices. Image: Ground Picture/Shutterstock.com
By: John GrobeThe Thrift Savings Plan is making it even easier for separated participants to withdraw funds. Effective May 15, 2024, there is no longer a requirement that you wait 30 days between TSP withdrawals.
This is due primarily to the fact that withdrawal requests can be completed entirely on-line.
From its inception in 1987, until the implementation of the Thrift Savings Plan Modernization Act (TSPMA) five years ago in 2019, you were allowed only two withdrawals from the TSP in your lifetime.
You could take one partial withdrawal and one final withdrawal – that was it.
Fortunately, for those who wanted to receive monthly income from the TSP, monthly payments (even if they went on for years) were considered to be the one final withdrawal.
From the implementation of the TSPMA until this past May 15th separated participants were allowed to take an individual withdrawal as often as every thirty days. Now there is no limit as to how often withdrawals can be taken.
I imagine that most separated participants are interested in receiving a stream of income from their TSP account.
These folks will elect installment payments which they can adjust as needed. The fact that they can now take payments more frequently than every 30 days will mean nothing to them. However, for those who are drawing on their Thrift Savings Plan account as needed, this change adds much more flexibility to their choices.
Individual Retirement Arrangements (IRAs) still have more flexibility than the TSP and other employer sponsored defined contribution plans, but with this change, the TSP comes closer to levelling the playing field.
Did you know that the most named reason for moving in retirement in 2022 was to lower housing costs? The states that had the biggest net gains in population (i.e., more folks moved in than moved out) were Vermont, Maine, South Carolina, Delaware, and Arkansas. This includes moves for all reasons, not just moves made after retirement. The biggest net losers were New Jersey, California, Illinois, Minnesota, and Connecticut.
John Grobe, President of Federal Career Experts, is an expert in the area of federal employee retirement and benefits. This expertise comes from his 26 year federal career in which he managed the retirement program in a 3,500-employee office of a large federal agency.
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