TSP Modernization Act of 2017

The TSP Modernization Act of 2017, which became law on November 17, 2017, will provide for more flexible withdrawal options for Thrift Savings Plan participants. These changes were implemented on September 15, 2019. The TSP plans to roll out these changes in September, 2019.

The TSP states : The law eliminates the statutory prohibition on multiple post-separation withdrawals and multiple age-based withdrawals while a participant is still working. It also removes the restriction that participants cannot take partial post-separation withdrawals if they’ve already taken an age-based in-service withdrawal. Though it has no effect on required minimum distributions mandated by the Internal Revenue Code, the law also allows separated participants who are over age 70½ to remain in the TSP, eliminating the requirement to make a withdrawal election on an entire account balance. Participants will also be able to stop monthly payments, change payment frequency, or elect to purchase an annuity while receiving monthly payments.

The Executive Director of the Federal Retirement Thrift Investment Board (FRTIB) has the authority to establish parameters regarding this new ability to take multiple withdrawals, and the law gives the FRTIB up to two years to make the regulatory and operational changes necessary to enact these changes.

Withdrawal Account Percentages
According to the TSP, "[I]n addition to the changes made by the new law, we’re also adding the ability to specify how much of your withdrawal should be Roth and how much should be traditional; withdrawals currently come out pro rata from both sources."