New Flexibilities for TSP Withdrawals Shake Things Up, and More
A weekly round-up of pay and benefits news.
Officials at the agency that administers the federal government’s 401(k)-style retirement savings program said the first full month of expanded withdrawal options for participants has produced some significant shifts in how federal employees and retirees have been using their accounts.
Last month, the Thrift Savings Plan implemented the TSP Modernization Act, which allows participants to make multiple post-separation partial withdrawals. Federal workers ages 59 and a half and older may make up to four in-service withdrawals per year. Participants may also choose whether their withdrawals come from their Roth accounts, traditional accounts, or a combination of both.
Those who have already begun receiving monthly payments can now change the amount and frequency of their payments at any time. Additionally, some withdrawals can now be done entirely online, while others can be done mostly through the TSP website, although participants must print out and sign a form to submit at the end of the process.
At Monday’s monthly meeting of the Federal Retirement Thrift Investment Board, which administers the TSP, Director of Participant Services Tee Ramos said that since the changes went live, officials have seen a decrease in lump sum full account withdrawals by nearly half compared with the previous month.
“Instances where someone was taking all of their money out of the TSP decreased by 47%,” Ramos said. “This was one of the things that was the primary reason to give these flexibilities, to give people options so they didn’t take all of their money out.”
Meanwhile, other withdrawals whose restrictions have been loosened saw significant increases in the month since the changes were implemented, compared with the final month under the old rules. Ramos said that partial withdrawals increased by 333%, while age-based withdrawals increased 254%.
Tanner Nohe, project manager for the Additional Withdrawals Project, said the numbers are even more stark when compared with the same period in 2018. Compared with the same month-long period last year, partial withdrawals increased 414%, while age-based in service withdrawals grew 372%, he said.
“We’re seeing a lot of people who requested a second in-service withdrawal, because that was previously not allowed,” Nohe said.
Meanwhile, the Office of Personnel Management and Health and Human Services Department on Tuesday sent a governmentwide memo reminding federal workers of the dangers of flu season and stressing the importance of employees receiving the flu vaccine.
In a joint memo to all federal employees, OPM Director Dale Cabaniss and HHS Secretary Alex Azar encouraged feds to get vaccinated to protect their coworkers and members of the public.
“Getting vaccinated reduces the spread of flu from you to them, which can protect your family members, co-workers and all those around you,” they wrote. “As the secretary of Health and Human Services and director of the Office of Personnel Management, we get vaccinated to protect our loved ones and to do our part to ensure the health and wellness of every federal employee.”
Flu vaccines are available to federal employees through the Federal Employees Health Benefits Program, often for free, and federal agencies frequently hold vaccine drives at employees’ offices.