The Thrift Savings Plan is on schedule for a September launch of new account withdrawal options that will remove restrictions many investors long have been sore about.
By Eric Yoder Eric Yoder National reporter focusing on internal federal government personnel, management and budget policies Email Bio Follow May 30 at 6:00 AM Current and former federal employees and military personnel soon will have more options when it comes to withdrawing money from their retirement accounts.
Although those who leave the government for retirement or other reasons may leave their accounts in place, the limited withdrawal choices have been cited as a main reason so many transfer the money to an individual retirement account or other tax-favored savings plan instead — 36 percent do so within a year.
Although the Thrift Savings Plan is a federal agency, it is self-funding and operates much like a corporation, with a chief executive officer overseen by a governing board. Under the new policies, to be effective Sept. 15, those who separate from the government will be allowed to take partial withdrawals as often as once every 30 days, and those with both types of balances will be allowed to take the money from one or the other in addition to prorating.
Ravindra Deo, executive director of the board, said the changes could motivate some investors to decide to stay with the Thrift Savings Plan since “they want more flexibility and this will give it to them.” He said that by transferring out, investors are passing up advantages including investment fees that are much lower than those charged by mutual funds and other investment vehicles.
“I think some have been making bad decisions because of a misunderstanding that once they retire they need to withdraw the account and reinvest it, which is inaccurate,” added Dailing, chair of a separate advisory board of federal employee organizations that met jointly with the TSP’s board.
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