The Thrift Board has updated “Fact Sheet 10, Questions and Answers about Changes to TSP Withdrawal Options.” This Fact Sheet was originally issued in December and the current update adds some detail on the changes that will be made during the implementation of the TSP Modernization Act. The Board has until November of 2019 to institute the changes.
There are several changes regarding partial withdrawals; currently you are allowed only one partial withdrawal from your TSP account.
You will be able to take up to four age-based in-service withdrawals per calendar year once you reach the age of 59 ½. Taking an age-based withdrawal will no longer prohibit you from taking a partial withdrawal once you have separated. There will be no change regarding in-service hardship withdrawals.
Once you are separated from federal service, there will be no limit to the number of partial withdrawals you can take as long as you do not take them more often than every thirty days.
You will be able to take partial withdrawals even if you have begun taking periodic payments from your account.
You will have the option of taking a withdrawal from just your Roth balance or just your traditional balance. This eliminates the “Roth tax trap” for those who withdraw from their TSP prior to reaching the age of 59 ½. This particular change was not part of the TSP Modernization Act, but the Thrift Board decided to make it anyway.
More on TSP withdrawals at ask.FEDweek.com
Monthly payments will now be called “installment payments” and they will no longer be monthly; quarterly and annual options will be available. You will be able to change the amount and frequency of installment payments at any time throughout the year. One item that will not be changed is the fact that, once you elect payments of a specific dollar amount, you will not be able to switch to the IRS life expectancy table option. You will also be able to stop your installment payments at any time without having to “cash out” or roll over your account.
The Thrift Board tells us that they will continue to update Fact Sheet 10 as things progress.