TSP Relaxes Hardship Withdrawal Rules to Help Hurricane Harvey Victims

View this article online at https://www.fedsmith.com/2017/09/01/tsp-relaxes-hardship-withdrawal-rules-help-hurricane-harvey-victims/ and visit FedSmith.com to sign up for free news updates
By on September 1, 2017 in Pay & Benefits with 0 Comments
Texas National Guard soldiers assist victims of Hurricane Harvey

Texas National Guard soldiers arrive in Houston, Texas to aid citizens in heavily flooded areas from the storms of Hurricane Harvey. (Photos by Lt. Zachary West , 100th MPAD)

Just as FedSmith author John Grobe predicted yesterday, the TSP has relaxed its hardship withdrawal rules temporarily to assist victims of Hurricane Harvey.

Starting today, the TSP will treat any Financial Hardship In-Service Withdrawal Request (Form TSP-76) received until January 24, 2018 as qualifying for a hardship withdrawal. The distributions must occur before January 31, 2018 to qualify for this treatment.

Eligibility

Participants have to meet one of the following criteria:

The participant’s primary residence or place of employment is located in a covered disaster area and has incurred a loss as a result of Hurricane Harvey OR the participant’s hardship withdrawal will be used to assist an eligible family member who lives or works in a covered disaster area and who has incurred a loss as a result of Hurricane Harvey.

Additionally, participants must meet ALL of the following criteria:

  • The participant must be actively employed with the federal government.
  • The participant must complete Form TSP-76, Financial Hardship In-Service Withdrawal Request.
  • The participant must write “Hurricane Harvey” at the top of page 1 above the name of the form.
  • The participant must check the “Personal Casualty Loss” box on page 2, Item 18 of the request form, as the reason for requesting financial hardship.
  • The participant request must be received in our office by January 24, 2018 and, in compliance with IRS guidelines, the distribution must occur before January 31, 2018. Any Financial Hardship In-Service Withdrawal Request forms received after January 24, 2018 will be processed as a standard hardship withdrawal, and the participant’s TSP contributions will automatically stop for 6 months.

If all requirements are met, the TSP will then waive the rule that prohibits a participant from making employee contributions for 6 months after taking a hardship withdrawal. This will allow an employee to continue to make contributions to the TSP and receive the employer match (if eligible). This temporary change will not be effective retroactively.

If the participant wants to stop TSP contributions, he or she must complete Form TSP-1 or use the applicable automated system.

© 2017 Ian Smith. All rights reserved. This article may not be reproduced without express written consent from Ian Smith.

Tags:

About the Author

Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce.

Top