TSP Board Still Seeking Lawmaker to Sponsor Its Proposal to Ease Withdrawals
May 23, 2016
Despite receiving approval from the Senate-confirmed overseers last year, Thrift Savings Plan officials are still seeking a champion in Congress to sponsor legislation that would make it easier for former and current federal employees to access funds in their retirement savings accounts.
The Federal Retirement Thrift Investment Board is looking for a lawmaker to "carry the banner" for a legislative package that would overhaul the withdrawal process for TSP participants, said Kim Weaver, the board's director for external affairs, at a meeting on Monday. The five-member presidentially appointed panel gave the agency authority to pursue a legislative change in July 2015, but FRTIB has not found a member of Congress to introduce it.
Weaver said the agency has worked in recent months to get all the elements of the bill exactly right and is still actively pursuing a willing advocate on Capitol Hill.
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Labor groups that make up the Employee Thrift Advisory Council also attended the meeting and offered their support in identifying a sponsor for the bill. Jim Sauber, the chief of staff at the National Association of Letter Carriers, said he was sure the union could tap its network to find an "ally" to move the measure through Congress.
FRTIB has pursued the change since a 2013 survey found one major reason employees moved their retirement savings into a privately run account was the difficulty they faced in accessing their money. Recent marketing efforts appealing to outgoing feds to keep their TSP accounts active after separating from federal service have resulted in similar feedback, board officials said Monday.
The TSP currently offers two main withdrawal categories for participants, one for those who want to take money out while they are still working for the government (in-service) and another for employees who leave the government (post-separation). In-service withdrawals are permitted either for financial hardship or once an employee reaches a certain age. Many enrollees and federal employee advocates find the current regulations surrounding when and how they can make withdrawals too restrictive.
The proposed changes the TSP board has put forward include:
- Allow multiple withdrawals (currently only one is allowed) for the age-based (59 and a half) in-service withdrawal, as well as remove the restriction on post-separation partial withdrawals related to this type of transaction.
- Allow multiple partial post-separation withdrawals. Currently, participants can only choose one partial withdrawal under this option; subsequent transactions must be full withdrawals.
- Eliminate the withdrawal election deadline for post-separation withdrawals.
In the proposal put forward by FRTIB last year, Executive Director Greg Long expressed some caution about allowing TSP participants to make withdrawals.
"Just because people want more flexibility, does not by itself mean it is prudent for the TSP's fiduciaries to provide that flexibility," he wrote in a memorandum the Senate-confirmed members of the board ultimately approved. "Although it may appear counter-intuitive, the research on this issue demonstrates that additional withdrawal flexibility leads to more participants keeping money inside the employer-based qualified plan system longer."
Meanwhile, FRTIB is working on finalizing a request for proposal to solicit a private company to help integrate and improve customer service. Known as ExPRESS, the program will add new features such as chat and email for TSP participants seeking assistance. It will also create self-service options and data points that allow for more personalized agency-to-user engagement and outreach.
The agency said it expects to issue the final RFP by September and fully implement the changes in two years. While he would not get into specifics, Long said the customer service overhaul will come with a hefty price tag.
"It is not a surprise to us that trying to be better costs money," he said.
Kellie Lunney contributed to this report.
May 23, 2016
TSP Board Still Seeking Lawmaker to Sponsor Its Proposal to Ease Withdrawals
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