More Details Revealed About Changes Coming to the TSP

A proposed rule published in the Federal Register outlines changes coming to the TSP under the TSP Modernization Act.

Changes coming to the Thrift Savings Plan under the TSP Modernization Act have taken one step closer to becoming a reality.

The Federal Retirement Thrift Investment Board, the agency that manages the TSP, recently issued a proposed rule in the Federal Register to start the process of amending current TSP regulations according to the new law. The changes are still set to go into effect on September 15, 2019 as previously announced.

The proposed rule contains a number of changes that will impact TSP participants with respect to implementing the TSP Modernization Act. A summary of some of them follows below; be sure to read the full proposed rule in the Federal Register for more details.

Post-Separation Withdrawals

The proposed rule notes that, under the new law, the FRTIB is proposing to eliminate the restriction on partial post-separation withdrawals for participants who have taken age-based, in-service withdrawals. The FRTIB is also proposing to allow all separated participants to take as many partial post-separation withdrawals as desired.

The proposed rule states that a TSP participant “will be able to elect to receive any partial post-separation withdrawal in the form of a single sum payment, installment payments, a life annuity, or any combination of these options. However, a participant may only have one installment payment series in place per account at any given time.”

Additional Installment Payment Options

The proposed rule states that the FRTIB is proposing to allow TSP participants to elect to receive installment payments on an annual or quarterly basis, as well as on a monthly basis (monthly is the option currently available prior to the new law).

TSP participants could also change the amount and frequency of installment payments throughout the year. Currently, once a participant makes an election to receive fixed dollar installment payments, he or she may not switch to life-expectancy-based installment payments.

TSP participants would also be permitted to stop these payments at any time without receiving the remainder of their accounts in a final withdrawal. TSP participants receiving installment payments may elect to receive some or all of their remaining account balances in the form of a single sum payment, an annuity, or a combination of these options.

Age-Based, In-Service Withdrawals

Regarding in-service withdrawals for TSP participants age 59 1/2 or older, the proposed rule states:

Currently, a TSP participant who is 59 1/2 or older and not separated from federal service may make a one-time election to receive all or part of his account balance in a single sum payment. The FRTIB is proposing to permit participants to take up to four age-based, in-service withdrawals per calendar year. The 30-calendar-day processing period applicable to partial post-separation withdrawals will also apply. For participants with more than one TSP account, these limits apply separately to each account.


The proposed rule is open to public comments until August 9, 2019. As of the time of this writing, it had 7 public comments.

About the Author

Ian Smith is one of the co-founders of He has over 20 years of combined experience in media and government services, having worked at two government contracting firms and an online news and web development company prior to his current role at FedSmith.