Washington, D.C – The Thrift Savings Plan, an important piece of the federal employee retirement plan, would be modernized and improved under bipartisan legislation approved by a Senate committee on Wednesday.
The National Treasury Employees Union (NTEU) endorsed S. 873 and sent a letter to members of the Senate Homeland Security and Governmental Affairs Committee urging them to vote yes and advance the proposal to the Senate floor.
The TSP Modernization Act of 2017, sponsored by Sen. Rob Portman (R-Ohio) and Sen. Tom Carper (D-Del.), would give federal employees much-needed flexibility for withdrawing money from their TSP accounts.
“The rules for how federal employees can manage their accounts have not kept pace with the modern workforce, and these changes would make the TSP a more attractive and user-friendly choice for employees and retirees,” said NTEU National President Tony Reardon.
NTEU is a member of the TSP Employee Thrift Advisory Council and has long advocated for less restrictive withdrawal rules for the TSP.
The TSP Modernization Act would allow active federal employees to make multiple age-based withdrawals and remain eligible for partial withdrawals once they leave government employment. It would allow those who left the federal workforce to make multiple partial post-separation withdrawals. And it would allow those receiving monthly payments to change the amount or frequency of their payment at any time, rather than just once a year.
NTEU has also endorsed similar House legislation from Rep. Elijah Cummings (D-Md.) and Rep. Mark Meadows (R-NC).
In 2013, TSP participants who no longer worked for the federal government transferred $9 billion out of the TSP to other institutions. Of those, 27 percent told TSP that they wanted greater flexibility with payments and withdrawals.
"Our members have been asking for these changes and we applaud these Senators and House members for listening to their concerns,” Reardon said. “The low administrative fees of the TSP make it a wise investment option for federal employees and we believe these changes will encourage more members to stay in the plan even after they retire.”
NTEU represents 150,000 employees at 31 federal agencies and departments.