TSP broadens flexibilities for feds hit by hurricanes
Through the spring, employees can make multiple withdrawals without having to halt contributions.
Federal employees affected by hurricanes Katrina, Rita and Wilma can withdraw more Thrift Savings Plan funds until the end of March, the TSP board announced Monday.
The board removed some restrictions on financial hardship withdrawals from the 401(k)-style retirement savings account for hurricane victims.
Ordinarily, participants requesting such a withdrawal can do so only once every six months, and they cannot contribute to their TSP account for six months afterward.
Until March 31, however, qualifying participants will be able to make multiple withdrawals and will be allowed to do so without controls on contributions. The TSP board announced these flexibilities Monday in the Federal Register.
They follow ones granted immediately after the disaster in New Orleans. At that time, the board removed restrictions only for federal employees affected by Hurricane Katrina. That exemption lasted through Dec. 31. Now Katrina victims are included in the new regulation, which extends the flexibilities to Wilma and Rita victims.
Financial hardships are defined by the board as "an immediate and significant financial need that necessitates a distribution from your TSP account."
To qualify, participants must have a negative cash flow, or incur extraordinary expenses such as medical bills, legal expenses or a personal casualty loss such as "damage, destruction, or loss of property resulting from a sudden, unexpected or unusual event such as flood, earthquake, hurricane, fire, tornado or theft."
TSP participants requesting a financial hardship withdrawal must be current federal employees, and the request must be at least $1,000.
Unlike loans, in-service withdrawals are permanent, so participants lose the money and potential future earnings on it. Participants cannot repay the withdrawals.
Employees are not required to prove hardship in order to take a withdrawal, but the form does ask employees to certify a genuine financial hardship, under penalty of perjury.
To apply for a withdrawal, participants can complete this form and either fax it to 1-866-817-5023 or mail it to:
- TSP Service Office,
- P.O. Box 385021,
- Birmingham, AL 35238