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.


 
 

 
U.S. Air Force photo by Senior Airman Jason Couillard

Top AF leaders speak at Nellis AFB

U.S. Air Force photo by Senior Airman Jason Couillard Chief Master Sgt. of the Air Force James A. Cody speaks to Airmen April 7 during a town-hall style meeting at Nellis Air Force Base, Nev. Cody, along with Air Force Chief of...
 
 
U.S. Air Force photo by Senior Airman Christopher Tam

99th SFS wins 2013 AF Large Security Forces Unit Award

U.S. Air Force photo by Senior Airman Christopher Tam Staff Sgt. Jordan Young, right, 99th Security Forces Squadron training instructor administers pepper spray to Staff Sgt. Anthony Dykhuis, 99th SFS unit training manager, Apr...
 
 

AF updates officer, enlisted voluntary force management eligibility lists

JOINT BASE SAN ANTONIO-RANDOLPH, Texas — Select Airmen in specific categories who were not formerly eligible for fiscal year 2014 force management voluntary separation are now being offered voluntary separation. These individuals will not be subject to involuntary programs in fiscal year 2014. Officers from 33 Air Force specialty codes by year group and enlisted...
 

 

Civilian personnel manage careers with myPers

JOINT BASE SAN ANTONIO-RANDOLPH, Texas — myPers, the Air Force official online source for personnel policy, information and day-to-day transactions, empowers civilian employees to manage their careers. “This resource can save employees an infinite amount of time by providing direct online access to answers and valuable information about many of the everyday personnel concerns and the...
 
 
U.S. Air Force photo by Airman 1st Class Thomas Spangler

99th CES firefighters train to make difference

U.S. Air Force photo by Airman 1st Class Thomas Spangler Carl Lambert, 99th Civil Engineering Squadron fire captain, prepares for live fire suppression training at the aircraft burn trainer March 27 at Nellis Air Force Base, Ne...
 
 

Physical training uniform shortages through summer

WASHINGTON — Airmen trying to keep chilly temperatures from affecting their workout may have a difficult time finding the Air Force improved physical training uniform, or IPTU, pants and jackets this spring and summer. The new issued IPTU is made with a softer fabric and will replace the legacy physical training uniform, which was made...
 




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