Changes to the TSP Withdrawal Options

by | 05Jun2018 | Thrift Savings Plan | 0 comments

We’re huge fans of the Thrift Savings Plan (TSP) at Military Millions, but many people didn’t realize how limited the options were when you tried to get your money out of it. You had to use one of the TSP-approved methods, there weren’t that many, and they were inflexible.

The TSP Modernization Act of 2017, however, gave TSP participants some additional options for withdrawing their money, making saving for retirement just a little easier on the back end. You can now take withdrawals when you want and in in the amounts you want.

The TSP Modernization Act:

  • Eliminated restrictions on multiple post-separation withdrawals and multiple age-based withdrawals while a participant is still working.
  • Removed the restriction that participants could not take partial post-separation withdrawals if they’d already taken an age-based in-service withdrawal.
  • Allows you to decide whether the withdrawal comes from your Roth or traditional TSP account. Previously, withdrawals were made proportionally. In other words, if 90% of your TSP balance was in the traditional and 10% was in the Roth, that is how they’d come out. You couldn’t direct which type of account you wanted the money to come from.
  • Removed the requirement to declare one of the TSP withdrawal plans at age 70.5.
  • Allows those already using a withdrawal option to change it.

These changes are not effective yet. The TSP has two years from NOV 2017 to implement them, but they’ve already started so I suspect it won’t take the full two years.

You can read more about the changes in this TSP document – Questions and Answers about Changes to TSP Withdrawal Options.

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