The Senate this week sent a key piece of legislation to the president’s desk, which will give participants in the Thrift Savings Plan long-awaited flexibilities and more withdrawal options.

The TSP Modernization Act passed unanimously in the Senate, after the House approved the bill last month.

But when the president signs the bill, participants won’t see changes to the plan immediately.

The Federal Retirement Thrift Investment Board, the agency that administers the TSP, said it plans to finish writing the requirements for new withdrawal guidelines by the beginning of February.

The agency began working on the withdrawal project in September, in anticipation of the bill soon becoming law. The FRTIB will first focus its attention on post-separation withdrawals, in-service withdrawals and source-specific withdrawals, said Tee Ramos, director of participant services for the TSP.

“The plan that we have right now is to be able to deliver benefits in the quickest fashion,” he said during Wednesday’s Employee Thrift Advisory Council meeting. “[We] could possibly look at putting these into production in a phased manner. We’re not 100 percent [on] that’s how we’re going to end up because we’re in the very beginning of the requirements process.”

Ramos said the agency will communicate to TSP participants a specific timeline for when they can expect the plan’s changes to take effect.

Currently, federal employees who have left government can only make one partial post-separation withdrawal — either a lump-sum payment, a series of monthly payments or annuity payment. Under the new legislation, separated TSP participants will be able to make several, partial-post separation withdrawals and time them to their specific needs.

Federal employees still working and over the age of 59 1/2 will also be able to make multiple age-based withdrawals.

TSP participants will be able to receive withdrawal payments annually or quarterly. Participants can change payment amounts at any time, and they can stop periodic payments and allow the remaining balance to stay in the plan. In addition, participants will be able to choose a partial withdrawal or purchase an annuity if they schedule periodic payments.

Finally, the TSP modernization act will eliminate the TSP withdrawal election deadline. Currently, participants are required to make a decision about a post-separation withdrawal by April 1 of the year after they turn age 70 1/2 and leave federal service.

The FRTIB said it recognized TSP participants are anxious to start making withdrawals with more freedom.

According to a recent survey of TSP participants, respondents said they were least satisfied with their withdrawal options. About 62 percent said they were satisfied with those flexibilities.

Roughly 74 percent of active TSP participants who said they planned to transfer money from their accounts to another plan within 10 years of their retirement said they’re looking for more flexible withdrawal options elsewhere, while 85 percent of separated participants said they’ll transfer money out of the TSP to accounts with more choices.

The board partnered with Gallup to survey about 39,000 TSP participants. Of the 6,725 who answered, 89 percent said they were satisfied or extremely satisfied with the TSP overall.

A new F fund contract

The FRTIB has also released a request for proposal for a fund manager for the F fund, or the Fixed Income Index Investment Fund.

The F fund, which held $28.2 billion in assets as of October, tracks the Barclays Capital U.S. Aggregate Bond Index.

BlackRock currently manages the F fund and all of the TSP’s other funds. The current BlackRock contract is set to expire, said Kim Weaver, director of external affairs at the FRTIB.

The new contract will be for one-year term with four yearlong options.

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