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Legislation Report

MAY 2017

Legislation introduced in the Senate April 6th could offer federal employees greater retirement flexibility by providing more options for withdrawing funds from the Thrift Savings Plan (TSP). The TSP Modernization Act is sponsored by Senators Rob Portman (R-OH) and Tom Carper (D-RI) on the 30th anniversary of the TSP's launch. Federal workers are transferring about $9 billion out of their TSP retirement funds and into other higher fee retirement accounts every year upon separating from federal employment. According to a press statement from Senator Portman, a significant reason as shown by TSP surveys is the plan's overly strict withdrawal rules, which provide less flexibility than do private sector options. By modernizing these withdrawal regulations, the proposed TSP Modernization Act would change the current rules that allow only two post-separation withdrawals (in the form of a lump-sum payment or a stream of monthly payments, or annuity payments) to allow multiple, partial post-separation withdrawals as needed. And for federal employees who are still working and are older than 59, the bill will allow multiple age-based withdrawals. The bill also adds flexibility to encourage retention in the TSP by allowing the election of quarterly or annual payments, and permitting periodic withdrawals to be changed at any point during the year.

You can go to NARFE's Legislative Action Center and ask your Senators to Support Senate Bill 873, the TSP Modernization Act of 2017. You can also call their offices or write them a letter; their information is at the top of your newsletter.

Jon Lampman
Legislation Chair
ph: (925) 228-8501

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