Federal employees will soon have more flexibility to manage their Thrift Savings Plan (TSP) accounts under legislation that has passed both houses of Congress with strong bipartisan support and now awaits the president’s signature.
“Passage of this legislation is a victory for NTEU members and all federal employees and retirees,” said Tony Reardon, National President of the National Treasury Employees Union (NTEU).
The TSP Modernization Act, endorsed by NTEU, was approved by the House in October and unanimously passed the Senate this week. It is a noncontroversial and common-sense proposal to help federal employees better plan for their retirement.
“The Thrift Savings Plan, which operates like 401(k) accounts that are common in the private sector, is a critical component of a federal employee’s retirement and its rules were overdue for an update,” said Reardon. “Federal employees are eager to take advantage of this new flexibility and make the financial decisions that are best for them and their families.”
The legislation allows active federal employees to make multiple age-based withdrawals and remain eligible for partial withdrawals once they leave government employment. Those who left the federal workforce can make multiple partial post-separation withdrawals. And it allows those receiving monthly payments to change the amount or frequency of their payment at any time, rather than just once a year.
Once it becomes law, the Federal Retirement Thrift Investment Board will have two years to produce regulations to implement these changes and NTEU will work to try to shorten that timeline.
As a member of the Employee Thrift Advisory Council, NTEU raised the issue of stringent withdrawal rules many times and pressed for these legislative changes that are financially in the best interest of NTEU members and the federal workforce. Many TSP participants reported that a desire for greater flexibility drove decisions to move money out of the program. The withdrawal rules for the TSP have not changed since the program was established in 1986.
NTEU applauds the efforts of the original cosponsors of the legislation: Rep. Elijah Cummings, Md.; Rep. Mark Meadows, NC; Sen. Tom Carper, Del; Sen. Rob Portman, Ohio.