We have received a lot of questions from our readers over the past year or so wanting to know when the changes implemented by the TSP Modernization Act would take effect. Until today, we only knew a general time frame: September 2019; however, the Thrift Savings Plan has now provided a specific date as to when you can expect the changes to go into effect.
According to a recent bulletin posted by the TSP, the changes under the new law will go into effect on September 15, 2019.
Change to Eliminate Financial Hardship In-Service Withdrawal Six-Month Suspension Rule
The bulletin contains information for federal agency payroll and HR staff about changes to the rules governing hardship withdrawals from the TSP while in service.
The bulletin notes that as of September 15, any TSP participant who received a financial hardship in-service withdrawal and is suspended from contributing to the TSP will be able to re-start TSP contributions even though the participant may not have completed the six-month suspension period.
It also states that affected participants will receive a TSP notice alerting them that they can resume contributions as of September 15, 2019. Restarting TSP contributions is the participant’s responsibility.
About the TSP Modernization Act
The law passed by Congress makes several important changes for federal employees who participate in the TSP.
Under current TSP rules, participants may only elect one partial age-based withdrawal after they turn 59½ or one partial post-separation withdrawal after separation from federal employment. The TSP Modernization Act would eliminate these restraints by allowing for unlimited age-based or post-separation withdrawals.
For federal employees over age 59½ who are still working, the bill will allow multiple age-based withdrawals. Employees who have left government can make multiple partial post-separation withdrawals. The bill also allows election of quarterly or annual payments, and permits periodic withdrawals to be changed at any point during the year.
For additional details about the new law, see the links below.