TSP Announces Rule Change on Installment Payments

July 31, 2020 9:53 AM
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The Federal Retirement Thrift Investment Board, the agency that oversees the Thrift Savings Plan, announced a permanent rule change this week regarding starting and restarting installment payments based on life expectancy.

This is the announcement posted on the TSP website:

Restriction to be lifted on starting and restarting installment payments based on life expectancy — The FRTIB is permanently changing the rule that prevents you from starting installment payments based on life expectancy if you have previously received installment payments. Beginning in January 2021, all TSP participants who are eligible for installment payments may elect to receive payments based on life expectancy whether or not they previously started and then stopped installment payments. This means that if you are currently receiving life-expectancy payments, you may now stop them, knowing that you will be able to restart them next year. (You will not be able to restart them in 2020, but you can always use other withdrawal types for which you’re eligible.) This is a significant rule change, especially if you currently receive life-expectancy payments for the purpose of receiving required minimum distributions (RMDs) and want to temporarily suspend those payments while RMDs are waived in 2020. To do so, log in to My Account now and select Withdrawals and Changes to Installment Payments to stop your payments. To restart them in 2021, log in again and start a new transaction to request installment payments based on life expectancy. Please disregard any TSP materials that state the old rule, including instructions you may see when using the online tool to stop payments. We will update them as soon as possible.

Posted July 29, 2020

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