A news report from the Government Executive website (www.govexec.com) says more than 14,000 federal employees requested such withdrawals during October, marking a new monthly record for the Thrift Savings Plan (TSP). According to the news report, between 10,000 and 12,000 TSP participants on average make hardship withdrawals per month.
Data from the Federal Retirement Thrift Investment Board indicates the increase was a result of the government shutdown. Since federal employees were unsure about whether they would be paid for the time lost by the shutdown, many took hardship withdrawals of at least $1,000 from their accounts. Employees could only take the withdrawal after proving negative monthly cash flow or extraordinary new expenses, such as medical or legal bills.
Government Executive points out these participants are now banned from contributing to their accounts for six months and will also lose their agency’s matching employer contributions for that time period. “It is very unfortunate that these employees were forced to withdraw money that should be saved for their retirement to make ends meet,” Colleen M. Kelley, president of the National Treasury Employees Union, said in the news report.