House set to vote on easing TSP early withdrawal penalty

[Y2KBug]

So, I wrote TSP an email and asked if they would let me reconsider my withdrawl option since the new law passed, they said NO. They did say I could change from "Life expectancy" monthly Payments, to "Fixed" monthly payments, but then I can't change back to "Life expectancy" once I've left that... BUMMER..

 

[ATCJeff]

FedSmith Article:

Bill Exempting Some Feds From TSP Withdrawal Penalty Becomes Law : FedSmith.com

 

[Lakebound]

Haven't read the bill but it would need a grandfather clause to address prior actions of retirees. Good luck. Sometimes they include them.

FS

I believe it will for those who retired at 50. We'll see. All I know is that I am stoked about my retirement now more than ever!

Frank

Sent from my XT1080 using Tapatalk

 

[FogSailing]

Haven't read the bill but it would need a grandfather clause to address prior actions of retirees. Good luck. Sometimes they include them.

FS

 

[Y2KBug]

So this has gone to the President, has anybody heard what the likelihood is of him signing it?? If so, my next question (Since I'm a retired LEO) is will TSP let me change my withdrawl choice, since I didn't want the penalty and took the Life Expectancy option. Maybe I would have done it differently, if I had no penalty to pay. ANy thoughts?

 

[PessOptimist]

Good catch ATCJeff. Our legislative types do this all the time. If necessary they will rip out the parts about LE types getting tax relief for TSP withdrawals, leave the title intact and put whatever they want in the text. All perfectly legal they say. Then they go on record as having voted for the title while most citizens do not read what the bill actually makes public law.
PO

 

[ATCJeff]

Update HR 2146:

[h=3]GovTrack’s Bill Summary[/h]This bill became the vehicle for passage of Trade Promotion Authority (TPA) for the Trans-Pacific Partnership (TPP) trade deal currently being negotiated. The bill was originally introduced as a bill to address issues with retirement funds of federal law enforcement officers and firefighters. On June 18, the House added TPA to the end of this bill and passed both components together, sending the bill to the Senate.
The addition of TPA to this bill followed a failed attempt to pass the Trade Act, H.R. 1314, a bill that combined TPA with Trade Adjustment Assistance (TAA). Although the Senate passed the Trade Act, the House only passed the TPA portion, while the TAA portion failed. This bill, H.R. 2146, includes only the TPA portion of the Trade Act. For more on TPA and TAA, see our summary of the Trade Act. (Note that H.R. 1314 was itself originally introduced regarding an unrelated matter and became the vehicle for the ultimately failed passage of the Trade Act.)
What follows is our original summary of this bill, H.R. 2146. The provisions that the summary below refers to remain in the bill.
The Defending Public Safety Employees' Retirement Act would allow retired federal law enforcement officers and firefighters over the age of 50 and with 20 years of service to withdraw money from their retirement funds without any tax penalty. Typically there is a 10 percent tax penalty on retirement funds withdrawn before the age of 59½. In his press release following the bill’s passage through the House, sponsor Rep. Dave Reichert (R-WA8) said that since law enforcement officers and firefighters are able to retire at the age of 50 after 20 years of service they should be exempt from the 10 percent tax penalty. The bill was passed by the Senate with an amendment changing the effective date from December 31, 2014 to December 31, 2015. It now awaits House approval of the amendment.

 

[Lakebound]

Thanks for pointing that out.

Frank

 

[waxmanak]

I didn't see any connection to H.R. 2146 in that article. Could you help us connect the dots to what you posted please?

Frank

From the article...
The legislation being eyed as the vehicle for the new strategy is a public-safety retirement measure, H.R. 2146, sponsored by Representative Dave Reichert, a Washington Republican.Reichert, in an interview Tuesday, confirmed that leaders were talking about using his bill, which passed the House 407-5 on May 12 and the Senate by voice vote on June 4. He said a final decision hadn’t been made.
“It’s a revenue bill and it’s already been passed by the Senate,” Reichert said. “They told me that’s the kind of legislation they are looking for.”
He said one reason is that such a bill couldn’t have other Senate amendments attached to it.

 

[Lakebound]

House Republicans have just decided to use this bill to forward their "fast track trade" nonsense.
Republicans Considering New Path for Fast-Track Trade Vote - Bloomberg Politics

I didn't see any connection to H.R. 2146 in that article. Could you help us connect the dots to what you posted please?

Frank

 

[waxmanak]

House Republicans have just decided to use this bill to forward their "fast track trade" nonsense.
Republicans Considering New Path for Fast-Track Trade Vote - Bloomberg Politics

 

[nnuut]

I think it's good!

 

[Lakebound]

Senate passed bill with minor changes. Back to the House it goes for vote. This bill should be passed and signed by the president soon. My opinion, this changes everything for the select few who qualify. Big question is how will TSP administer this change to our TSP accounts.

Time to start filling out my retirement papers and make an appointment with my financial planner.

Jeff

Concur. This is great news for me too!

 

[ATCJeff]

Senate passed bill with minor changes. Back to the House it goes for vote. This bill should be passed and signed by the president soon. My opinion, this changes everything for the select few who qualify. Big question is how will TSP administer this change to our TSP accounts.

Time to start filling out my retirement papers and make an appointment with my financial planner.

Jeff

 

[nasa1974]

This is for a specific set of Federal Employees.

Here is what Govexec.com says:

House Passes Bill Exempting Some Feds From Retirement Tax Penalty - Pay & Benefits Watch - Pay & Benefits - GovExec.com


House Passes Bill Exempting Some Feds From Retirement Tax Penalty
By Kellie Lunney May 12, 2015 31 Comments


"The House on Tuesday passed bipartisan legislation 407-5 that would allow federal law enforcement officers and firefighters to access money in their Thrift Savings Plan accounts without penalty when they are eligible to retire.
H.R. 2146 would reform the tax code so that federal law enforcement officers and firefighters, who are eligible to retire earlier than many other federal employees, aren’t subject to the 10 percent tax penalty on TSP retirement funds and other 401(k)-type plans tapped before the age of 59 and a half. Civilians who access their retirement investments, such as a 401(k), prior to turning 55 if they are retired, or 59.5 if they are still working, incur the IRS fine...."

 

[nnuut]

Hey I've been retired for over 5 years, why can't I empty my TSP TAX FREE? I haven't touched it 20% is a big Federal hit!

 

[Lakebound]

I'm hoping it's not limited to those specific career services and the legislation applies to "all similar" plans. I'm going to be checking with the retirement branch.

Please keep us updated if you find anything out.

Frank

 

[ATCJeff]

Tom,

Reading the bill my understanding is this will change the IRS rule that allows certain Federal employees who retire after 50 to withdraw from Gov't plans. Not sure what Gov't plans mean. Good question.

Jeff

So another thing to consider is if you have outside 401k. If you roll your private 401k's into TSP will that unlocked those funds. (I'm thinking yes because how are they going to differentiate between what was rolled over and what was contributed.) But then the down side is you're still in the TSP which is limiting.

I was thinking of moving out of TSP when I retired but now I may need to rethink that if my money is going to be available to me should I decide to retire before 55.

 

[Itchn2retire]

Doubtful. If you read the proposed legislation, if only applies to a select group: "expand the exemption to include specified federal law enforcement officers, customs and border protection officers, federal firefighters, and air traffic controllers who similarly have reached age 50."

I'm hoping it's not limited to those specific career services and the legislation applies to "all similar" plans. I'm going to be checking with the retirement branch.

 

[Lakebound]

There's probably no need for that. The bill will help those who would be eligible to retire at 50 so I'm sure they'll vote themselves a new benefit. This is pretty much guaranteed to pass. :laugh:


"Under both CSRS and FERS, Members of Congress are eligible for a pension at age 62 if they have completed at least five years of service. Members are eligible for a pension at age 50 if they have completed 20 years of service, or at any age after completing 25 years of service. The amount of the pension depends on years of service and the average of the highest three years of salary. By law, the starting amount of a Member’s retirement annuity may not exceed 80% of his or her final salary."

The above excerpt is from http://www.senate.gov/reference/resources/pdf/RL30631.pdf

Doubtful. If you read the proposed legislation, if only applies to a select group: "expand the exemption to include specified federal law enforcement officers, customs and border protection officers, federal firefighters, and air traffic controllers who similarly have reached age 50."

Please feel free to correct me if I am wrong but, Congress critters don't meet those requirements but I do. And, the reasoning behind this legislation (sadly) is that group named above, of which I am a part of tend to have a shorter life span due to the stress of our occupations.

So....... I'm calling my Senators.

Frank