For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.
Benefits October 1, 2013
Shutdown Hurts Federal Employee Retirement Accounts
October 1, 2013 (PLANSPONSOR.com) – During the federal government shutdown, federal employees will not be able to make contributions to their retirement plan accounts.
Reported by Kevin McGuinness
Employee contributions into the Thrift Savings Plan (TSP) come from payroll deductions; therefore, federal employees on furlough during the shutdown cannot make payments into their plans, GovExec.com reported. Matching “employer” contributions from federal agencies are being suspended as well.
Such contributions could be retroactively paid, posited Government Executive, but would require Congress to pass a continuing resolution or appropriations bill once the shutdown has ended.
The ability of federal employees to take loan from their TSP accounts will also be suspended during the shutdown. Those who took out loans prior to the shutdown will be allowed to suspend payments on them for up to one year while on “non-pay” status. Federal employees are asked to contact their respective agencies for further information on this topic.
Federal employees are still able to make hardship withdrawals from their retirement accounts, with a minimum of $1,000, during the shutdown. However, these employees must be able to certify that they have a genuine financial hardship, such as a negative cash flow or extraordinary new expense.