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Senate panel approves TSP modernization bill

Legislation to give federal employees more flexibility with their Thrift Savings Plan accounts was approved by the Senate Homeland Security and Governmental Affairs Committee on Wednesday.

Similar legislation was approved by the House Committee on Government Reform July 19 and referred for a full House vote.

Aimed at stemming an estimated $9 billion that is transferred out of the $482 billion TSP every year, the proposed TSP Modernization Act would allow multiple, partial post-separation withdrawals by retirees. Active federal employees older than 59 could take multiple age-based withdrawals. The bill also allows quarterly or annual payments, and participants can change periodic withdrawals at any point during the year.

The legislation is supported by the Federal Retirement Thrift Investment Board and government employee organizations. In a letter to Senate committee members on Tuesday, National Treasury Employees Union President Tony Reardon said the legislation "is sure to persuade federal employees to make use of the low administrative fees in the TSP and keep their money in the fund, positively impacting their financial security in retirement."