The TSP Modernization Act (H.R. 3031) has passed both the House and Senate and is now on its way to the White House. It is unknown at this point if President Trump will sign it into law as nothing has been listed on the White House website about the bill as of the time of this writing.
The bill passed the Senate yesterday without amendment. The bill is a significant one for federal employees. For federal employees separated from the federal workforce, the bill will change the current rules that allow only one partial post-separation withdrawal (in the form of a lump-sum payment, a stream of monthly payments, or annuity payments) to allow multiple, partial post-separation withdrawals that retirees can time to their individual needs.
And for federal employees over age 59½ who are still working, the bill will allow multiple age-based withdrawals. The bill also allows election of quarterly or annual payments, and permits periodic withdrawals to be changed at any point during the year.
Under current law, TSP participants are limited to one withdrawal from their accounts while in federal service upon reaching the age of 59 1/2 (age-based withdrawal), and participants who leave federal service can make only one withdrawal of a portion of the balance in their account (post-separation withdrawal). For more details on the bill, also see House Passes TSP Modernization Act.
The bill directs the Federal Retirement Thrift Investment Board (FRTIB), the body that oversees the TSP, to prescribe such regulations as necessary to carry out the new changes no later than two years after it is passed into law.
We will update our readers if/when the bill becomes law.
Update: The bill was signed by President Trump and is now law.