Federal employees would gain more flexibility with their Thrift Savings Plan accounts under bipartisan legislation introduced Friday by Rep. Elijah E. Cummings, D-Md., and Rep. Mark Meadows, R-N.C.
Similar legislation was introduced in the Senate on April 6 by Sens. Rob Portman, R-Ohio, and Tom Carper, D-R.I.
The bills are aimed at stemming an estimated $9 billion that is transferred out of the $482 billion TSP every year into higher-fee accounts when employees leave the federal government.
If enacted, the proposed TSP Modernization Act would allow multiple, partial post-separation withdrawals by retirees, and for active federal employees older than 59½, multiple age-based withdrawals. The bill also seeks to encourage retention in the TSP by allowing quarterly or annual payments, and permitting periodic withdrawals to be changed at any point during the year.
Currently, TSP participants are allowed only two post-separation withdrawals in the form of a lump-sum payment, monthly payments or annuity payments.
The legislation is supported by the Federal Retirement Thrift Investment Board and government employee organizations, including the National Treasury Employees Union. NTEU National President Tony Reardon said TSP rules have not kept up with the needs of the modern workforce. "We think these improvements will provide an incentive for more people to keep their money in the TSP and allow everyone to continue to benefit from the TSP's low fees," Mr. Reardon said in a statement.