Congress recently passed a bill called the TSP Modernization Act (PL 115-84). So… What does that mean for you and your family?
Until September 6, 2019, you have withdrawal options based on current TSP policy. However, starting September 19, 2019, you’ll have new ones. In the interim, you cannot withdraw your money. So plan ahead if you plan on needing retirement money during that time period. The new bill lets you do the following starting 19 September of this year. Under the new policy:
- You can take out money when you separate from service in multiple withdrawals
- You can take out money when you are 59 1/2 or older and still working in federal civilian or uniformed service (you can take up to four in-service withdrawals each year)
- You can now choose which balance should come from your Roth TSP balance, your traditional TSP balance, or both
- You will no longer need to take all of your money out at 70 1/2
- If you are separated from service, you can pull money out monthly, quarterly, or annually
- You can stop, start, or change your installment payments at anytime online at tsp.gov
Basically, here’s the lowdown…
This means you can access your money a lot quicker than you used to be able to. Under the old policy, you could only take out part of your money once in your entire life. Under the new policy, you can take money out 4 times per year while in the military or federal service after age 59 1/2 or as many times as you’d like once you’re out of the military or federal service (restricted to once every 30 calendar days).
Additionally, once you turn 70 1/2, you no longer have to take all of your money out of your account. This is good news as you will continue to accrue capital gains, dividends, or interest that you may need at that age.
While I don’t advise you take money out of your account, this bill gives you options to do so in a time of need. It’s an ever greater reason to contribute to your TSP and to start today! $