Air Force

March 22, 2013

Furlough to affect thrift savings plan contributions

Claudette Roulo
American Forces Press Service

(AFNS) — Federal civilian employees could see their Thrift Savings Plan contributions reduced if furloughs take effect.

The Thrift Savings Plan is a retirement savings and investment plan for federal employees and members of the uniformed services, including the Ready Reserve.

“Employees who have selected their TSP contribution to be a percentage of their pay will see smaller contributions during the furlough period due to their reduced pay,” said Navy Cmdr. Leslie Hull-Ryde, a Defense Department spokeswoman.

For example, an employee who earns $1,000 of basic pay every two-week pay period and contributes 10 percent of it to the TSP would make a $100 TSP contribution during a normal pay period. However, if the employee is furloughed for two days per pay period, his or her basic pay would decrease to $800. As a result, the TSP contribution would be $80 per pay period.

Employees who contribute a set dollar amount won’t see that amount change with a reduction in pay, Hull-Ryde said. For this reason, now is a good time to review TSP contribution amounts to see if they are appropriate, TSP officials said.

Basic pay reductions also will affect the matching funds contributed by the Defense Department and other agencies. According to a TSP news release, any reduction in pay will proportionally decrease the matching funds contribution, regardless of whether employees contribute a percentage of their pay or a set dollar amount.

The furloughs may cause financial hardship for some employees, and in those cases they may consider making a hardship withdrawal from their TSP fund. Such withdrawals have several restrictions:

  • If you take a hardship withdrawal, you will not be able to make any TSP contributions for six months after having received your funds.
  • You may withdraw only your contributions and the earnings associated with them, and the total amount cannot exceed your financial hardship.
  • You must pay income tax on the taxable portion of any withdrawal, and you may also be subject to a 10 percent early withdrawal penalty tax.
  • If you are a Federal Employees Retirement System participant, you will not receive agency matching contributions.
  • A hardship withdrawal cannot be repaid, so your TSP account is permanently reduced by the amount of your withdrawal.

A better option may be taking a loan against your TSP, officials said. Loans can be repaid — plus interest — but the account continues to accrue earnings even as the loan is paid back.

TSP officials recommend that employees think carefully before decreasing or stopping their traditional TSP contributions. Those contributions are subtracted from pre-tax income, and terminating the contributions could increase income tax liability. Roth TSP contributions are subtracted from employees’ after-tax income, and changes will not affect tax liability.

“One of the great things about your TSP contributions, no matter how small, is that the earnings compound over time. If you stop your contributions, even for a short time, you’ll miss this opportunity altogether,” the news release said.

Federal Employees Retirement System participants would, in effect, be losing free money by stopping their contributions, because matching contributions also would stop, officials said.




All of this week's top headlines to your email every Friday.


 
 

 

Air Force revamps air expeditionary force construct

WASHINGTON (AFNS) — The Air Force will deploy Agile Combat Support Airmen under its redesigned air expeditionary force construct October 1. The primary purpose of the redesign was to look at ways to deploy more ACS Airmen with their units and standardize dwell times across the Air Force as much as possible to present a...
 
 
U.S. Air Force photo by Staff Sgt. Victoria Sneed

FCC provides home away from home

U.S. Air Force photo by Staff Sgt. Victoria Sneed Brittany Morrill, a Family Child Care provider, shows memory cards to Sam and Ayden in her home on Nellis Air Force Base, Nev., Sept. 9. FCC providers are given free access to c...
 
 
U.S. Air Force photo by Airman 1st Class Christian Clausen

Frag out! Airmen attend last Air Force-only grenade training class

U.S. Air Force photo by Airman 1st Class Christian Clausen Tech. Sgt. Preston Meier, 99th Ground Combat Training Squadron NCO in charge of combat arms, throws a live M-67 fragmentation grenade during the last iteration of the M...
 

 
U.S. Air Force photo by Airman 1st Class Thomas Spangler

Securing Nellis AFB flightline

U.S. Air Force photo by Airman 1st Class Thomas Spangler With redundancy in the number of entry control points on the Nellis Air Force Base flightline, the 99th Air Base Wing and the 57th Wing collaborated to close numerous ECP...
 
 
U.S. Air Force photo by Staff Sgt. Siuta B. Ika

CAAs help shed light on career options

U.S. Air Force photo by Staff Sgt. Siuta B. Ika Senior Master Sgt. Tonya Joyce (left) and Master Sgt. Marcy Holland, both 99th Force Support Squadron career assistance advisors, are available to help Airmen stationed in Souther...
 
 

JAG Corps announces 2015 law school programs

NELLIS AIR FORCE BASE, Nev. — Officers interested in continuing to serve the Air Force as a Judge Advocate are invited to apply to the Funded Legal Education Program and Excess Leave Program. Officers selected for FLEP have the opportunity to attend law school at the Air Force’s expense while also continuing to receive full...
 




0 Comments


Be the first to comment!


Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>


Directory powered by Business Directory Plugin