The Senate on Monday passed by unanimous consent a bill giving participants in federal employees’ 401(k)-style retirement savings program more options in managing their investments, sending the bipartisan measure to President Trump’s desk.
The TSP Modernization Act (H.R. 3031) would allow federal employees and retirees to make multiple age-based withdrawals from their Thrift Savings Plan accounts and remain eligible for partial withdrawals after they leave government as well. Additionally, those who have left government would be able to make multiple partial post-separation withdrawals.
Those receiving monthly payments would be able to change the amount of their annuity at any time, instead of only once per year. Participants could change the frequency of payments as well.
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The House passed the bipartisan bill early last month, and it has the TSP’s backing. TSP officials have said program participants want the flexibilities the measure offers.
Currently, feds who wish to make age-based withdrawals can only do so once while employed by the government, and then they cannot make a partial withdrawal after they leave their job. Those who have already left government can make one partial post-separation withdrawal, but then must move to full withdrawal options.
The National Active and Retired Federal Employees Association applauded passage of the bill, noting a lack of flexibility is one of the main reasons people move money out of the TSP. The group urged Trump to sign it quickly.
“This bill will provide the proud men and women who serve this nation in the civil service and in the military greater control over their own retirement savings and the ability to plan responsibly for their future,” NARFE President Richard Thissen said in a statement. “The changes, common in the private sector, are much needed and long overdue.”
Even if the bill becomes law, TSP participants may need to wait up to two years for the board overseeing the retirement savings program to write the regulations that will allow the new withdrawal options to take effect, Thissen said. He urged the Federal Retirement Thrift Investment Board to move as fast as possible on the regulations.