The Washington Post

Would a debt ceiling stalemate hurt federal retiree fund?

”Davidson”

If you’re a federal employee worried about what will happen to your Thrift Savings Plan account if President Obama and congressional leaders don’t reach agreement on raising the debt ceiling, stay cool.

Here‘s part of a letter the folks at TSP send to people who are concerned about their savings in the G (for government) Fund, which is invested exclusively in short-term U.S. Treasury securities:

“With regard to the Federal debt limit, absent legislation by Congress to raise it, the Secretary of the Treasury may determine that portions of the monies in the G Fund cannot be reinvested in Treasury securities because to do so would exceed the present Federal debt limit. However, all of the G Fund monies would still be on account with the Treasury, and the interest which would accrue if the G Fund were fully invested would still be credited to the G Fund.

“Some published reports have mischaracterized the actions which may be taken by the Treasury, which are authorized under the law. G Fund investments are safe and will continue, by law, to accrue earnings. The integrity of the G Fund would not be compromised. TSP participants’ accounts would not be affected as a result of any suspension of issuance of Treasury securities to the G Fund.”

The letter goes on to say: “The G Fund account balances would be exactly the same from day to day as if they were invested in Treasury securities. Furthermore, disbursements of TSP loans and withdrawals would not be delayed, nor would the amounts of those payments be reduced.”

So, no need to worry about your TSP account.

federaldiary@washpost.com

Follow the Federal Diary on Twitter: @joedavidsonwp

Joe Davidson writes the Federal Diary, a column about federal government and workplace issues that celebrated its 80th birthday in November 2012. Davidson previously was an assistant city editor at The Washington Post and a Washington and foreign correspondent with The Wall Street Journal, where he covered federal agencies and political campaigns.

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