Upcoming Changes For Federal Thrift Savings Plans
October 31, 2018

Upcoming Changes For Federal Thrift Savings Plans

By: Sam Saunders

What it means for your retirement, your future, and when these new changes go into effect. Does your financial planner account for the worst?

If you think getting fired from a government job is hard, try withdrawing money early from your Thrift Savings Program, or TSP. It’s a commonly used savings and retirement plan for military service members and other federal workers, and if you’ve opted to contribute a percentage of your federal paycheck to the program, you’re one of millions contributing to the $500 billion retirement account.

A simple way to look at it: TSP is similar to the 401K plans offered by private sector employers and companies. Learn more about the TSP here.

But the TSP hasn’t always been the first choice for those serving in the armed forces, and it’s why almost half of troops withdraw all their TSP money after separation from the military. It’s almost as if TSP account holders don’t trust a government that’s $21 trillion in debt. Strange indeed.

Because of this, TSP rules are changing in the near future, per 2017’s TSP Modernization Act. The bulk of reforms are mostly withdrawal related; giving account holders more access and control over their funds in an attempt to retain more serious program members.

Four big changes coming in September 2019 include:

⦁ Multiple in-service and post-separation partial withdrawals will be allowed.

⦁ Choose whether your withdrawal comes from your Roth balance, traditional balance, or a proportional mix of both.

⦁ You will no longer be required to make a full withdrawal election after you turn 70½ and are separated. (You will still need to receive IRS-required minimum distributions (RMDs).)

⦁ If you’re a separated participant, in addition to the option of monthly payments, you’ll be able to choose quarterly or annual payments, and you’ll be able stop, start, or make changes to your installment payments at any time.

The TSP might be a good start when first starting to save, but better financial options exist when you have a lifetime of savings you’re looking to put to wise use.

Ideally, your TSP account should be one of several sources of retirement income you can rely on. This could include social security payments, disability pensions, an IRA, or other savings you’ve accumulated over the years.

The question is, who do you trust to manage your wealth?

The TSP might be a good start when first starting to save, but better financial options exist when you have a lifetime of savings you’re looking to put to wise use.

Ideally, your TSP account should be one of several sources of retirement income you can rely on. This could include social security payments, disability pensions, an IRA, or other savings you’ve accumulated over the years.

The question is, who do you trust to manage your wealth?

No Plan Survives Contact With The Enemy

I’m Sam Saunders, your AAFMAA Wealth Management & Trust Relationship Manager, and we both know Murphy’s Law exists for a reason. Your financial future is too important to not account for all of the possibilities, and you need someone who’s got your 6.

Whether you’re active duty, transitioning, or veteran status, we stress test your financial plans against any and all bumps you might encounter along the way.

Give me a call and see why more service members are trusting AAFMAA Wealth Management & Trust to manage their retirement today!

Cell: (757) 621-6238
Email: rsaunders@aafmaa.com

If you’d like to speak with one of our Financial Advisors to receive a Free Portfolio Review, please fill out the contact form below.

References:

https://www.tsp.gov/PDF/formspubs/financial-stmt.pdf
https://www.tsp.gov/planparticipation/about/purposeAndHistory.html
https://www.thebalance.com/the-u-s-debt-and-how-it-got-so-big-3305778
https://www.tsp.gov/PDF/formspubs/tspfs10.pdf

Share: