Advertisement
retirement

Thrift Savings Plan Withdrawals to Get Easier for Federal Retirees

New rules make it easier to leave money in the low-cost Thrift Savings Plan.

A new law will benefit federal employees and members of the military who want to keep their money in the low-cost Thrift Savings Plan when they retire. The TSP has low fees, but it has frustrated savers with its strict withdrawal rules: After you take one partial withdrawal, you can access the remaining balance only by cashing out the entire account, converting it to a life annuity, or taking a series of monthly payments that you can change only once a year.

The new law eliminates the restriction on partial withdrawals and lets participants set up and change regular payments throughout the year. The Federal Retirement Thrift Investment Board, which runs the TSP program, has up to two years to enact the new rules.

Advertisement - Article continues below

“This is great news for all TSP account holders,” says Didi Dorsett, a certified financial planner with Safe Harbor Financial Ad­­visors, in Occoquan, Va. Many of her military and federal-employee clients have been rolling their TSPs into IRAs at retirement so they could have more control over withdrawals, even if it meant paying higher investment fees than they would have in the TSP.

Until the regulations are finalized, it’s a good idea to postpone rolling a TSP into an IRA or making other long-term withdrawal decisions, says Josh Andrews, director of military life advice for USAA.

For more information and updates on withdrawal rules, go to tsp.gov.

Advertisement
Advertisement

Most Popular

Election 2020: Joe Biden's Tax Plans
taxes

Election 2020: Joe Biden's Tax Plans

With the economy in trouble, tax policy takes on added importance in the 2020 presidential election. So, let's take a look at what Joe Biden has said …
September 18, 2020
3 Reasons to Wait Until 70 to Claim Social Security Benefits
social security

3 Reasons to Wait Until 70 to Claim Social Security Benefits

In a rush to file for Social Security benefits at age 62? Many people are, but slow down and do the math first.
September 29, 2020
5 Unfortunate Estate Planning Myths You Probably Believe
estate planning

5 Unfortunate Estate Planning Myths You Probably Believe

These all-too-common misconceptions can steer your estate plans in the wrong direction right from the start. Here’s how to overcome them and tips to b…
September 17, 2020

Recommended

The Best Vanguard Funds for 401(k) Retirement Savers
mutual funds

The Best Vanguard Funds for 401(k) Retirement Savers

Vanguard funds account for a third of the 100 most popular 401(k) retirement products. We rank Vanguard's best actively managed funds, including its t…
September 30, 2020
The 25 Best Low-Fee Mutual Funds to Buy in 2020
mutual funds

The 25 Best Low-Fee Mutual Funds to Buy in 2020

The key to building wealth long-term is buying high-quality (but low-fee) mutual funds run by seasoned stock pickers who have skin in the game. Here a…
September 29, 2020
Should You Retire During a Pandemic? 3 Things You Should Know
retirement planning

Should You Retire During a Pandemic? 3 Things You Should Know

You may have no choice but to retire early, so make these three crucial assessments now to see where you stand.
September 28, 2020
HSA Limits and Minimums
health savings accounts

HSA Limits and Minimums

Annually adjusted contribution limits and other requirements must be met if you're covering health care costs with a Health Savings Account.
September 21, 2020