{"id":24429,"date":"2026-01-05T17:49:56","date_gmt":"2026-01-05T17:49:56","guid":{"rendered":"https:\/\/finderica.com\/?p=24429"},"modified":"2026-01-05T17:49:56","modified_gmt":"2026-01-05T17:49:56","slug":"proposal-to-allow-penalty-free-tsp-withdrawals-in-certain-emergencies","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=24429","title":{"rendered":"Proposal to Allow Penalty-Free TSP Withdrawals in Certain Emergencies"},"content":{"rendered":"<div>\n<p><img loading=\"lazy\" loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-40926\" src=\"https:\/\/www.myfederalretirement.com\/wp-content\/uploads\/2024\/07\/tsp-DP_217404226_L.jpg\" alt=\"\" width=\"1999\" height=\"1333\" srcset=\"https:\/\/www.myfederalretirement.com\/wp-content\/uploads\/2024\/07\/tsp-DP_217404226_L.jpg 1999w, https:\/\/www.myfederalretirement.com\/wp-content\/uploads\/2024\/07\/tsp-DP_217404226_L-300x200.jpg 300w, https:\/\/www.myfederalretirement.com\/wp-content\/uploads\/2024\/07\/tsp-DP_217404226_L-1024x683.jpg 1024w, https:\/\/www.myfederalretirement.com\/wp-content\/uploads\/2024\/07\/tsp-DP_217404226_L-768x512.jpg 768w, https:\/\/www.myfederalretirement.com\/wp-content\/uploads\/2024\/07\/tsp-DP_217404226_L-1536x1024.jpg 1536w\" sizes=\"auto, (max-width: 1999px) 100vw, 1999px\"><\/p>\n<p>Congresswoman Eleanor Holmes Norton (D-DC) introduced last month legislation to expand the circumstances in which a recently separated federal employee can withdraw from their Thrift Savings Plan (TSP) account without being penalized.<\/p>\n<p>If passed, the Thrift Savings Plan Emergency Withdrawal Act (<a href=\"https:\/\/www.congress.gov\/bill\/119th-congress\/house-bill\/6929?s=1&amp;r=1\" target=\"_blank\" rel=\"noopener\">HR 6929<\/a>) would assist former federal employees pay their bills after leaving the federal workforce by allowing them to make penalty-free withdrawals from their TSP account in two ways:<\/p>\n<ul>\n<li>to make up the gap between the interim payments a retiree receives during the period the Office of Personnel Management (OPM) is calculating the retiree\u2019s final annuity and the estimated final annuity. According to OPM, the interim payments are usually 20% to 40% less than the finalized net payment.<\/li>\n<li>allows penalty-free TSP withdrawals if the individual is involuntarily separated from the federal government.<\/li>\n<\/ul>\n<p>In both cases, the maximum withdrawal would be $100,000. Individuals would be able to make a TSP withdrawal for up to a year after separation and to repay the withdrawn amount within three years to avoid the existing early withdrawal penalty, which is a 10% additional tax.<\/p>\n<p>\u201cDuring these troubling times for federal employees, this bill will help those who are separated from the federal government and in need of financial assistance,\u201d Norton said. \u201cThis bill will allow former federal employees avoid financial hardship by allowing them to make penalty-free withdrawals from their TSP account while OPM is calculating their final annuity, or if they are involuntarily separated from federal service.\u201d<\/p>\n<h2>New Federal Retiree Interim Annuity Payments<\/h2>\n<p>According to OPM, as soon as the agency gets a new retiree\u2019s retirement records, they provide \u201cinterim\u201d payments. These payments represent a portion of the retiree\u2019s final benefit and are usually made on the first business day of each month. \u201cWe try to provide you with income until we finish processing your application,\u201d the agency <a href=\"https:\/\/www.opm.gov\/retirement-center\/my-annuity-and-benefits\/annuity-payments\/#url=New-Retiree\" rel=\"noopener\" target=\"_blank\">describes<\/a>.<\/p>\n<p>The chart below from <a href=\"https:\/\/www.opm.gov\/retirement-center\/retirement-quick-guide\/opm-retirement-quick-guide.pdf\" target=\"_blank\" rel=\"noopener\">OPM\u2019s Retirement Quick Guide<\/a> illustrates the retirement process as 3-5 months long.<\/p>\n<figure id=\"attachment_43763\" aria-describedby=\"caption-attachment-43763\" style=\"width: 382px\" class=\"wp-caption aligncenter\"><img loading=\"lazy\" loading=\"lazy\" decoding=\"async\" class=\" wp-image-43763\" src=\"https:\/\/www.myfederalretirement.com\/wp-content\/uploads\/2025\/12\/opm-retirement-processing-timeline.png\" alt=\"\" width=\"382\" height=\"815\" srcset=\"https:\/\/www.myfederalretirement.com\/wp-content\/uploads\/2025\/12\/opm-retirement-processing-timeline.png 439w, https:\/\/www.myfederalretirement.com\/wp-content\/uploads\/2025\/12\/opm-retirement-processing-timeline-141x300.png 141w\" sizes=\"auto, (max-width: 382px) 100vw, 382px\"><figcaption id=\"caption-attachment-43763\" class=\"wp-caption-text\">OPM Retirement Processing Timeline (Source: OPM)<\/figcaption><\/figure>\n<p>\u00a0<\/p>\n<p><strong>To read the full text of the bill, <a href=\"https:\/\/www.congress.gov\/bill\/119th-congress\/house-bill\/6929?s=1&amp;r=1\" target=\"_blank\" rel=\"noopener\">go here<\/a>.<\/strong><\/p>\n<p><span class=\"cp-load-after-post\"><\/span><\/div>\n<p><a href=\"https:\/\/www.myfederalretirement.com\/tsp-emergency-withdrawal-act\/\" target=\"_blank\" rel=\"noopener\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Congresswoman Eleanor Holmes Norton (D-DC) introduced last month legislation to expand the circumstances in which a recently separated federal employee can withdraw from their Thrift Savings Plan (TSP) account without being penalized. If passed, the Thrift Savings Plan Emergency Withdrawal Act (HR 6929) would assist former federal employees pay their bills after leaving the federal<\/p>\n","protected":false},"author":2,"featured_media":8049,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[348],"tags":[5090,5907,29,443,5906],"class_list":{"0":"post-24429","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-retirement","8":"tag-emergencies","9":"tag-penaltyfree","10":"tag-proposal","11":"tag-tsp","12":"tag-withdrawals"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/24429","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=24429"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/24429\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/8049"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=24429"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=24429"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=24429"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}