The Congressional Budget Office recently released its analysis of the TSP Modernization Act, legislation that would allow federal employees to make multiple withdrawals from their TSP accounts.
The conclusion: “Enacting the bill would not affect direct spending.” However, the CBO noted that the additional withdrawals could affect the timing of taxes paid on the amounts withdrawn, but the effects would be negligible.
The CBO also said that the bill would not increase net direct spending or significantly increase on-budget deficits in any of the four consecutive 10-year periods beginning in 2028 if it were enacted.
Update: The CBO followed up with a second report on the Senate version of the bill, reaching essentially the same conclusion as in the first report on the House version.
Copies of both reports are included below.
About the TSP Modernization Act
The bill would allow TSP participants to do the following:
- Make multiple age-based and post-separation withdrawals
- Revise the timing and amounts of periodic payments
- Elect to combine partial withdrawals or an annuity with periodic payments