H.R. 3031 modernizes the Thrift Savings Plan by providing users with additional options to manage their invested funds, including the ability to make multiple post-separation partial withdrawals and to make multiple in-service age-based withdrawals once the participant has reached the age of 59 ½.
The Thrift Savings Plan (TSP) is a retirement savings and investment plan for Federal employees and members of the uniformed services, including the Ready Reserve. It was established by Congress in the Federal Employees' Retirement System Act of 1986 and offers the same types of savings and tax benefits that many private corporations offer their employees under 401(k) plans.
Upon separation from Federal services, if an account is vested and has more than $200, the entire account can remain in the TSP until the year following the year the participant turns 70 ½. A participant has two options for withdrawing, either partial or full withdrawals. A partial withdrawal allows participants to make a one-time-only withdrawal and leave the remaining balance until a later date. A full withdrawal can occur by taking the funds all at once, over a period of time, or through a purchased annuity that will pay the participant over the remainder of their life. Once a separated participant makes an election, the election cannot be changed. Age-based in-service withdrawals occur once the participant has reached age 59 ½ and is an active Federal employee. Currently, a participant may only take one age-based in-service withdrawal during the time they are actively employed. Taking an in-service withdrawal prohibits the participant from taking a post-separation partial withdrawal.