Last year’s debt-ceiling crisis cost U.S. taxpayers at least $1.3 billion. It also temporarily cost Thrift Savings Plan beneficiaries $378.5 million in earned interest in their portfolio’s Government Securities Investment Fund, or G Fund, according to the Government Accountability Office. Now, GAO reports, that money has been restored.
The G Fund, comprised of government-backed securities, often has been tapped to help avoid hitting the federal debt ceiling; the government must then repay the fund for its losses. Last spring, the government halted new investments into the G Fund, and $137.5 billion in principal lay fallow for more than three months. Treasury also suspended investments of the Civil Service Retirement and Disability Fund, the Postal Service Retiree Health Benefits Fund, and the Exchange Stabilization Fund during January 2011 and January 2012, when delays in raising the debt limit occurred, according to GAO.
Treasury has fully restored the lost interest from the G Fund’s three and a half month fallow period, as required by law, GAO says.
Thrift Savings Plan tax levies open up savings
Clarifying an existing law allowing the Internal Revenue Service to levy funds in Thrift Savings Plan accounts would net the government $24 million in increased revenue from 2013 to 2022, according to a new Congressional Budget Office estimate of a House bill.
Under the law, the IRS can collect unpaid federal taxes by levy -- ordering a third party to turn over property that belongs to taxpayers who have unpaid tax liability. The new legislation clarifies that TSP accounts are subject to that levy. But another law, the 1986 Federal Employees’ Retirement System Act protects assets in Thrift Savings Plan accounts, the CBO estimate explains.
The Federal Retirement Thrift Investment Board, which oversees TSP, frequently points to its primary imperative to protect the best interests of TSP beneficiaries. So when the Senate and House proposed the legislation this year protecting the IRS’ authority to make TSP accounts fair game for tax levies, the board had questions. Kim Weaver, FRTIB’s spokeswoman, said earlier this year that lawmakers had provided the board with sufficient clarification on the issue after years of misunderstanding. A 2010 Justice Department opinion also ruled that TSP accounts are subject to federal tax levies.
The clarification also was included in the version of the surface transportation bill the Senate passed in March. The House bill was ordered to be amended in April and awaits consideration by the full House.
TSP and Child Support
If you are one of the 35,000 TSP beneficiaries behind on your child support payments, the TSP’s advisory board is taking additional steps that could help you catch up, according to a Federal Times report.
TSP has long had the ability to garnish funds to pay for its beneficiaries’ child support but seldom used that authority until two years ago, when it signed an agreement with the Health and Human Services Department’s Office of Child Support Enforcement. Under that arrangement, TSP agreed to share data with HHS and help the department collect unpaid child support.
The TSP’s advisory board announced this week that it plans to use that authority more often due to increasing numbers of beneficiaries who are behind on child support payments. TSP processed 1,138 child support orders per month so far this year, up from a monthly average of less than 500 in 2011 and four in 2010, according to Federal Times.