Government affairs

On April 6, the Thrift Savings Plan Modernization Act of 2017 (S. 873) was introduced by Sens. Rob Portman (R-OH) and Tom Carper (D-RI). The bill seeks to loosen what is characterized as “overly restrictive withdrawal rules.”

If enacted into law, S. 873 would eliminate restrictions on age-based withdrawals allowing for active federal employees older than 59-1/2 to make multiple age-based withdrawals while still working and for retirees to make multiple, partial post-separation withdrawals. It would also allow participants to stop quarterly or annual payments, permit periodic withdrawals to be changed at any point during the year and save the option to purchase an annuity while recovering monthly benefits.

“The TSP has been instrumental in helping federal employees maximize their retirement security, and to mark the 30th anniversary of this critical savings vehicle this bill takes important steps to modernize this system to benefit them in the future,” Portman said.

“Making smart choices to prepare for retirement can be difficult, but everyone deserves to have financial stability at the end of their career,” Carper said. “The Thrift Savings Plan is a tool our hard-working federal employees count on to plan for their futures, but we need to make it work better for them.”

Each year, more than $9 billion is transferred from the government retirement fund to higher-fee accounts, due partially to TSP’s limits on withdrawals.

Currently, there is no House companion bill, and it is unclear whether the full Senate Homeland Security and Government Affairs Committee plans to take it up.