The Thrift Savings Plan (TSP) is a retirement plan established exclusively for members of the military, the Ready Reserve, and federal government employees. It is similar in benefits to a 401(k). Recent changes made by the Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act that affected many civilian retirement accounts have also made changes to the TSP that you need to know about.
The SECURE 2.0 Act became law in December 2022. The goal of the act, the
Federal News Network says, is to make it easier to save for retirement. Some of these changes will take effect as soon as January 2024.
Roth Balances Now Have No Required Minimum Distributions
Any Roth accounts under a TSP are now free of having to take required minimum distributions (RMDs)—at any time. The account owner can leave the money in the account for their lifetime and let it continue to earn interest if they choose to do so. Other retirement accounts, such as individual retirement accounts (IRAs) and traditional 401(k)s still have RMDs.
The Age to Start Taking RMDs Has Changed
Instead of having to take RMDs when you turn 72, the age requirement has changed. As of 2023, it is not necessary to start taking mandatory withdrawals until you are 73. A date was established when the required age would change again. Starting in 2033, withdrawals will be necessary when you turn 75. This new rule only applies to people born on or after Jan. 1, 1951.
