Thousands of Feds Withdrew Retirement Investments During Shutdown


Federal employees turned to their retirement investments for cash during the government shutdown, with thousands of workers taking hardship withdrawals to support themselves through the unpaid period.

Nearly 3,000 more feds withdrew from their Thrift Saving Plans during the shutdown than did in October of 2012, officials said at a Federal Retirement Thrift Investment Board meeting Monday. When the shutdown began, roughly 900,000 federal employees were unsure if they would get paid for the time they missed, though Congress has since agreed to issue retroactive pay to the furloughed workers. Employees required to work during the shutdown also did not receive pay until the government reopened, though they were guaranteed back pay from the outset.

Furloughed federal employees were prohibited from contributing to their TSPs during the shutdown, but those contributions will be paid retroactively as a result of the back pay. The workers were allowed to make withdrawals of at least $1,000 due to “financial hardship.”

Employees who made the withdrawals had to prove negative monthly cash flow or extraordinary new expenses, such as medical or legal bills, and are now banned from contributing to their accounts for six months. This means they will also lose their agency’s matching contributions for that time period.

TSP participants also moved their investments into safer funds during the shutdown. There were 128,000 inter-fund transfers during the 16-day shutdown, compared to 126,000 transfers during the entire month of September. A “significant” amount of those transfers went into the G fund, which invests in government securities and is the TSP’s safest offering.

Following poor fund performances in August, TSP participants also transferred heavily to the G Fund in September, the month prior to the shutdown, moving about $3.4 billion away from equity and into the government security fund.

When the government reopened on Oct. 17, this trend reversed and TSP participants largely moved their investments back into equity funds. On the first day after the shutdown alone, federal employees and retirees moved more than $1 billion into the S Fund, which is invested in small and midsize companies and tracks the Dow Jones Wilshire 4500 Index.

As has become typical in the past few years, the Treasury Department suspended investments in the G Fund as part of its “extraordinary measures” taken to delay the date at which the government would default on its debts. However, all payments have been restored and the “impact was zero” on TSP participants, according to board Executive Director Greg Long.

The board added it will likely not know the full blowback of the shutdown on the TSP until November, when all of October’s payrolls have been received and processed.  

Correction: Guidance from the Agriculture Department to its employees noted that federal employees could not take out loans on their Thrift Savings Plan accounts while in furlough status due to the shutdown, but the Federal Retirement Thrift Investment Board has notified Government Executive this is not correct. Furloughed feds were permitted to take out loans on their accounts during the shutdown. 

(Image via pterwort/

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

  • The Big Data Campaign Trail

    With everyone so focused on security following recent breaches at federal, state and local government and education institutions, there has been little emphasis on the need for better operations. This report breaks down some of the biggest operational challenges in IT management and provides insight into how agencies and leaders can successfully solve some of the biggest lingering government IT issues.

  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.

  • Ongoing Efforts in Veterans Health Care Modernization

    This report discusses the current state of veterans health care


When you download a report, your information may be shared with the underwriters of that document.