by STWS Advisor, Wes Battle-
[NOTE: ALL notary requirements have been waived by TSP during the COVID-19 emergency]
As we continue to evolve working in this new world of zoom, phone calls, and facemasks, things keep changing- TSP included. In a world before stay at home orders, for a married FERS participant to receive a distribution from their TSP account, a notarized signature from both the participant and the spouse has been arequirement. Having something notarized requires a face to face interaction, and by my experience, also requires that people need to be closer than 6 feet apart, so that would now be a bit difficult.
“Under these conditions, the regulation requiring spousal consent to be notarized has become an extraordinary hurdle for married TSP participants who need to request a withdrawal during this difficult time,” the TSP said.
So, TSP changed the rules. Now married participants only have to have a spousal consent by signature, no notary required. “Married participants must still obtain their spouse’s consent. The consent must be evidenced by the spouse’s signature (or any electronic signature alternative that the TSP has deemed sufficient to constitute written consent)” continued TSP. I will be interested to see what “electronic signature alternative” actually gets approved for use.
Why does TSP require a spouse consent anyway?
It’s how the law was written to establish TSP; the spouse has a legal entitlement to a survivor annuity. Married FERS participants are not permitted to take money out of the account for that would jeopardize the spouse’s right to retirement income without consent.
I personally think this feature is a little outdated, but on the whole, still is a good feature. The thinking here is that the participant and spouse are a team, and the spouse’s teamwork/sacrifices to the relationship allow the participant to contribute and grow their TSP balance. So, if the participant wants to take funds from the TSP account, they need to consult their team member for a joint decision.
Now, I would heavily caution all TSP participants that just because it is easier to get funds from TSP that you do NOT want to use TSP like a bank account. As I mentioned in another article, TSP sells pro-rata from the funds you’re invested in and multiple withdrawals could do major damage to your savings. Are their strategies to work through this crazy market time? Yes! Is moving everything to G Fund then taking a distribution a good idea? Absolutely not!
Please consult your financial advisor before making any decisions about drawing retirement funds. If you are already in retirement and 1. Have a drawdown strategy that includes TSP or 2. Have a financial advisor “that doesn’t really understand TSP” (yes, we hear that every day), then please consult with one of the CFP®s on our team. Having the right strategy makes all the difference.
It’s your FedLife, make it a great one.
#OPM #TSP #COVID19response #FERS #STWSERVE #Financialplanning
Wes Battle CFP®, AIF®, ChFEBC™ is a senior financial planner with Serving Those Who Serve who specializes in working with the Senior Executive service of the Federal Government. Wes provides retirement services to and seminar speaking to Federal Agencies. To connect with Wes you can find him online or at firstname.lastname@example.org