11/7/17 Alexandria, VA – The National Active and Retired Federal Employees Association (NARFE) applauds passage of the TSP Modernization Act of 2017, H.R. 3031, by the Senate on November 6. The legislation would provide more flexible withdrawal options for Thrift Savings Plan (TSP) participants. With passage in the House of Representatives last month, the bill now heads to the President’s desk. NARFE President Richard G. Thissen issued the following statement in response:
“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. The changes, common in the private sector, are much needed and long overdue.
“The current restrictive TSP withdrawal options are one of the leading reasons why participants transfer their money out of the TSP, despite the fact that the TSP provides sound investment options at a low cost. This bill will create flexible withdrawal opportunities for participants before and during retirement, offer greater financial independence and encourage participants to keep their money in the TSP.
“NARFE applauds the Senate for moving forward with this commonsense, bipartisan measure, and we urge the president to swiftly sign this bill into law.
“Once signed, we encourage the Federal Retirement Thrift Investment Board to issue the regulations necessary to make these options available as soon as possible.”
H.R. 3031 was introduced by Reps. Elijah E. Cummings, D-MD, and Mark Meadows, R-NC, and passed the House on October 11. Senators Rob Portman, R-OH, and Thomas R. Carper, D-DE, introduced a nearly identical bill, S. 873, which had been approved by the Senate Committee on Homeland Security and Governmental Affairs in July. Their efforts were instrumental in advancing the final bill through the Senate.
The legislation would allow multiple, partial post-separation withdrawals, which participants can time to their individual needs, and would provide multiple, age-based withdrawals for participants who are still working and are older than age 59-1/2. The TSP Modernization Act also would provide greater flexibility by allowing the election of quarterly or annual payments and permitting periodic withdrawals that can be changed at any point during the year. Payments could be stopped while leaving the account balance in the TSP. Finally, the bill would eliminate the withdrawal election deadline.
The Federal Retirement Thrift Investment Board, which oversees the TSP, has two years to issue regulations necessary to implement the expanded withdrawal options. While TSP participants will welcome the changes, they may need to wait up to two years to enjoy the expanded options.
The TSP provides individual retirement accounts for federal employees and retirees, as well as members of the military. It is the federal workforce equivalent of private-sector 401(k) and Roth 401(k) plans.
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The National Active and Retired Federal Employees Association (NARFE), one of America’s oldest and largest associations, was founded in 1921 with the mission of protecting the earned rights and benefits of America’s active and retired federal workers. The largest federal employee/retiree organization, NARFE represents the interests of 5 million current and future federal annuitants, spouses and survivors.