Important Benefit for Military Officers is Improving
I'm a fan of the Thrift Savings Plan (TSP). I think it is a great place to accumulate funds for your ultimate retirement. But I have often said that it isn't the greatest for taking your money out. That is about to change. The changes should be in place by September 15th of 2019. Here is a quick summary of the major changes:
Currently you can only make two partial withdrawals, with the second one being a complete withdrawal, from TSP. After the changes go into effect, you will be able to make multiple withdrawals essentially without limits.
Under the rules in place now, your distributions come out proportionately between your Roth and Pre-Tax balances. That will change as well and you will be able to select which "side" to take the distribution from. Your tax-exempt balance (from contributions made in a combat zone) will come out proportionally if you take distributions from your Pre-Tax balance.
You will now be able to take out periodic distributions on a monthly, quarterly or annual basis. Currently you must take the monthly distributions to avoid the partial withdrawal rule above.
Instead of only being able to change your periodic distributions once a year, you will be able to do it at any time.
Failure to take your Required Minimum Distribution will no longer result in your account being designated as "abandoned".
Overall, these changes are all good. I'm happy to see that they have been made. It certainly makes a stronger case for leaving your funds in TSP as you enter the distribution phase. But, I'm still not thrilled about the way TSP treats beneficiaries who inherit a TSP account. You can read more about that issue here.
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