Federal Retirement Thrift Investment Board, Washington, proposed a rule to provide Thrift Savings Plans participants with additional withdrawal options and flexibility.
The new polices would go into effect Sept. 15, the board noted in a filing with the Federal Register on Monday.
The new withdrawal policies will give participants in the $590.8 billion TSP — the retirement plan for 5.6 million federal employees and members of the uniformed services — more options for how and when they can access money from their TSP accounts.
For example, currently, participants receiving monthly benefits payments can change the amount of those payments only during an open season between Oct. 1 and Dec. 15. The new policy will allow participants to change the amount and frequency (monthly, quarterly, annually) of their benefit payments at any time throughout the year.
Moreover, an active federal service member who is 59½ or older may make a one-time election to receive all or part of his or her account balance in a lump-sum payment. The FRTIB is proposing to permit participants to take up to four age-based, in-service withdrawals per calendar year.
The proposed rule has been in the works for years and follows the passage of the TSP Modernization Act in 2017. While the bill was being discussed, it was estimated that $9 billion is transferred out of the TSP every year into higher-fee accounts when employees leave the federal government.
A public comment period will close on Aug. 9.