TSP Changes Set to Take Effect in September

Changes to the Thrift Savings Plan endorsed by NTEU will take effect Sept. 15, according to a new TSP bulletin issued on Friday.

Among the changes that will come with the implementation of the Thrift Savings Plan Modernization Act is that participants will be able to specify from which of their balances—Roth or traditional—they want their withdrawal to come.

In addition, TSP participants who received a financial hardship in-service withdrawal and are suspended from contributing to the TSP will be able to restart TSP contributions even though they may not have completed the six-month suspension period. TSP will send these participants a notice alerting them that they can resume contributions.

Participants will also no longer be limited to two post-separation withdrawals. Active federal employees will be able to make multiple age-based withdrawals and remain eligible for partial withdrawals once they leave government employment. Those who left the federal workforce will be able to make multiple partial post-separation withdrawals. And those receiving monthly payments will be allowed to change the amount or frequency of their payment at any time, rather than just once a year.

NTEU pressed for passage of the TSP Modernization Act, signed into law in 2017, to give TSP account holders more flexibility and better withdrawal options.

A fact sheet on the changes is available here