TSP modernization act

[Tabernacle]

I know that the tsp modernization act will allow multiple withdrawals but my question is will it allow more than 2 IFTs a month and also when will it become effective? My understanding is that the President has already signed it. Any info will be appreciated.

[MrSnrub]

This Fact Sheet should help:

https://www.tsp.gov/PDF/formspubs/tspfs10.pdf

[MrSnrub]

By the way, one nice thing that I don't think anyone is talking about is they're adding the ability to specify how much of your withdrawal will be from your Roth account and how much will be from your Traditional TSP account. So you won't have to worry about the early withdrawal penalty by withdrawing from your Roth account too early.

[Snapdragon]

Stupid 2 IFT rule stay as I understand it. I'm not holding my breath for when it becomes reality, I would love next year though.

[mindofmush]

By the way, one nice thing that I don't think anyone is talking about is they're adding the ability to specify how much of your withdrawal will be from your Roth account and how much will be from your Traditional TSP account. So you won't have to worry about the early withdrawal penalty by withdrawing from your Roth account too early.

I didn't see this on that TSP form S-10 pamphlet, where did you find the info about Roth/Traditional withdrawals?

[MrSnrub]

first page, left-hand side: “By the way, in 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.”

[evilanne]

Remember their campaign to stay with TSP?

They found that their rules resulted in greater withdrawals or people leaving TSP all together. If anything changed after starting full withdrawal, only option is to continue as is until next allowable change or close your TSP (cashing it all out and/or rolling it over to outside IRA). A definite advantage to financial advisors selling a Fed on their services.

The proportional system with Roth complicated everything, guaranteeing a quicker drawdown rate and eliminated the advantage of no RMDs at 70.5 for Roth. The work around, transferring Roth portion to an outside Roth account basically directs Feds to TSP's competition

It will be interesting to see what they come up with in any proposed regulations.

[Tabernacle]

So, the 2 IFT rule stays in? It would have been nice to have had another one in Dec. besides the G fund for the 3rd.

[mmmmmbeer]

first page, left-hand side: “By the way, in 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.”

Oh my goodness! This is GREAT!!! This is the only reason I was looking to move my Roth TSP balance into a Roth IRA in the first place.

NICE.. this is going to work out so much better.

[crondanet5]

I needed 12 more IFTs in December, and 20 in January. Stupid 2 IFT rule.

[MrSnrub]

My big question is why does the TSP care so much about people staying in the TSP after they retire? The more people stay the more money/users they have to oversee, therefore the harder it is to manage. Or are they making money off of everyones’ accounts through fees? But then if that’s the case why aren’t they lobbying to open up the TSP to all the U.S. workforce? Not all U.S. employees have 401k plans, y’know.

[Chulke]

That’s a good question Mrsnrub...what are they up to with trying to keep people in TSP? Is TSP insolvent? Have the politicians been robbing from our funds without us knowing it like they did with Social Security for so long? Or are they planning on taxing our TSP funds at withdrawal at a higher rate than other people with a 401k?


You might be on to something...the federal government never backs any kind of law unless it’s in the governments best interest...


I think this should give everyone pause to think about the TSP modernization act...they might have something up their sleeve or planning on passing another law down the road that will not be so nice to us fed employees...



Good luck to everyone!

[Aitrus]

I think it's because the TSP is required to act as a fiduciary. They are simply advising us to do what is, in their professional opinion, the best thing for our retirement goals.

For most of the people that use TSP in the role as it was designed, this advice is sound. TSP is the best deal available for those who use a buy-and-hold, which is the vast majority of those who invest in TSP.

[ron.logan]

That’s a good question Mrsnrub...what are they up to with trying to keep people in TSP? Is TSP insolvent? Have the politicians been robbing from our funds without us knowing it like they did with Social Security for so long? Or are they planning on taxing our TSP funds at withdrawal at a higher rate than other people with a 401k?


You might be on to something...the federal government never backs any kind of law unless it’s in the governments best interest...


I think this should give everyone pause to think about the TSP modernization act...they might have something up their sleeve or planning on passing another law down the road that will not be so nice to us fed employees...



Good luck to everyone!

Conspiracy I tell you.... someone has to pay the finance firms like BlackRock Institutional Trust that the Federal Retirement Thrift Investment Board currently contracts to manage the C fund

[mindofmush]

Of course BlackRock gets paid for managing the funds (they have to pay off that $10 million birthday party for the CEO)