TSP loans during a FURLOUGH
TSP put out a fact sheet for those being FURLOUGHED back in May. Now is a good time to recap some of those highlights, in case the furloughs look like they may last a while, and in case you run out of savings- and you need to access your TSP cash in an emergency to cover your bills:
Quote:
Should I take a loan?
Taking a TSP loan allows you to borrow money from your account while you are still actively employed by the Federal Government. You repay your own TSP account for the amount of the loan (plus interest) and therefore continue to accrue earnings on the money you borrowedafter you pay it back. Before you request a loan, you should know the following:
• If you expect to be furloughed on a continuous
basis, you can only take a loan if your furlough isexpected to last 30 days or less.
• If you expect to be furloughed on a periodic basis
(for example, one or two days per pay period), youcan take a loan.
• Loan payments are made by payroll deduction. If,
because of a furlough, you don’t earn enough perpay period for your agency to deduct the requiredloan payment, you will be responsible for keepingyour loan payments up-to-date so that you don’trisk a
taxable distribution. (Properly repaid TSPloans are not subject to income taxes or penalties.)
• You can continue to contribute to your TSP ac
countand, if eligible, receive Agency MatchingContributions.
• If you already have an outstanding loan when you
get furloughed, you need to make sure that you
stay up-to-date on your loan payments.
More Q&A's at: https://www.tsp.gov/PDF/formspubs/oc13-7.pdf
Re: TSP loans during a FURLOUGH
Quote:
Federal workers in non-pay status are also barred from taking out loans on their TSP accounts, as the payments on those loans must also come from payroll deductions. Employees who have already taken out TSP loans can suspend payments on them, however, for up to one year while on non-pay status. The payments would not be suspended automatically and employees would have to ask their agencies to send relevant information and forms to TSP.
Furloughed employees could receive some financial relief by withdrawing funds from their TSP accounts. The plan allows federal workers experiencing “financial hardship” -- meaning negative monthly cash flow or an extraordinary new expense, such as medical or legal bills -- to take money from their retirement account. The withdrawal must be at least $1,000 but is limited to the “amount of your financial need.” When employees make a financial hardship withdrawal, they are banned from contributing to their accounts -- and will also lose agency matching contributions -- for six months.
Employees applying for a hardship withdrawal do not need to provide any documentation, but must “certify, under penalty of perjury, [they] have a genuine financial hardship,” according to Kim Weaver, a TSP spokeswoman.
More:
Feds Furloughed By Shutdown Cannot Contribute to Retirement Fund - Pay & Benefits - GovExec.com
