Recently a largely anticipated bill H.R. 2146, which has new TSP rules, was passed by the Congress. This bill is intended to prove beneficial to the federal law enforcement officers and other employees that fall in the special category. As a part of the Bipartisan Trade Priorities and Accountability Act of 2015, this newly approved law will most definitely alter the capability of special category employees accessing their TSP accounts. These alterations to TSP access will be applicable to the following:
- Air Traffic Controllers.
- Customs and Border Patrol Officers.
- Federal Law enforcement officers.
- Federal fighters.
Now this leads us to ask the question that what indeed these changes do. Actually, by the introduction of these amendments, the same benefits that were awarded to local officers will now be given to federal officers as well. So, if you retire after the age of 50, then you will be considered eligible for withdrawing from your TSP account without having to face the 10-15 percent withdrawal penalty. Apart from this, the same regulations will still stay in place.
TSP Rules For Special Category Employees
The reason why we were in desperate need of this change was the fact that most of the law enforcement officers and the firefighters have been able to take money out of their retirement funds if they managed to retire on the year they turned 50 or later. In contrast to this, the federal officers with the same jobs were not given this luxury. The rule that is currently in place dictates that penalty free distributions be only allowed to officers that have retired at the ages of 55 or more. Yes, there is the 72(t) expectancy payment program but because it isn’t flexible enough and because there are many eligible officers that retire before 55, there was an ever-imminent demand of a change. These changes will be put into practice at the beginning of next year and all the withdrawals made after 1st January will not be penalized however any made prior to that date will be applicable to the current prevalent rules.
Here, it’s essential to keep in mind that this law will only alter the TSP access and will in no way alter the benefit fund. Any long term retirement or income plans will still remain the same. Not to mention that if your post-employment income sources were not substantial to let you make both ends meet, then this ease of access won’t make things better. The most obvious advantage is for the officers that are close to the age of 50 and can just stay a few more years before retiring to penalty-free withdrawals for years to come.
All in all, it’s expected that there are going to be many subjective factors that would affect every individual officer’s solution but this change is only going to enhance the options by introducing more flexibility. Having said that, we should laud the congress’ efforts because whenever hard work is done and progress made tangible, admiration and due credit should be given. Here’s hoping that more similar changes get made in the future.
