This is a sponsored column by attorneys John Berry and Kimberly Berry of Berry & Berry, PLLC, an employment and labor law firm located in Northern Virginia that specializes in federal employee, security clearance, retirement, and private sector employee matters.
By Kimberly H. Berry
The Thrift Savings Plan is a retirement savings and investment plan for federal employees and members of the uniformed services. It was established by Congress in 1986 as part of the Federal Employees’ Retirement Systems Act. The TSP offers the same types of savings and tax benefits that a 401(k) plan offers to private sector employees.
In April 2017, on the TSP’s 30-year anniversary, a bill was offered by Sens. Rob Portman (R-Ohio) and Thomas R. Carper (D-Del) to bring the TSP’s terms more up-to-date with similar programs. Specifically, the legislation seeks to expand investment and withdrawal options.
Last week, the Washington Post published a helpful Q&A that provided more details regarding the TSP’s new investment options. For instance, one of the TSP’s five funds, tracking international stocks, will be broadened in 2019 to include emerging markets and Canada. The TSP is also working towards allowing account holders to invest in funds outside of what’s currently offered.
Additional bills pending before Congress also allow for more withdrawal options post-retirement, including for federal workers and servicemen and women still employed and at least 59 1/2 years of age. Since current withdrawal options are limited, it is hopeful that these changes will allow participants more flexibility and freedom regarding their retirement savings.
Most TSP issues that we handle in our federal retirement practice involve withdrawal guidelines and requirements, including issues involving federal retirees who are divorced and ordered to divide their retirement benefits, including TSP benefits, with a former spouse.
In addition, federal employees and uniformed servicemen and women leaving employment for retirement or other reasons may keep TSP accounts open. However, they cannot add to their TSP accounts post-retirement or separation, but TSP monies can be transferred to an IRA or other tax-favored plans.
The transfer rules, including deadlines, can often be complicated and difficult to understand, but we hope that the legislation allowing for additional investment and withdrawal options will help bring more financial stability as well as a better understanding of the rules involving federal retirement plans.
If you need assistance with a federal employment, federal retirement or TSP issue, please contact our office at 703-668-0070 or at www.berrylegal.com to schedule a consultation. Please also like and visit us on Facebook at www.facebook.com/BerryBerryPllc.