Change To TSP Regulation On Loan Eligibility

DATE: JANUARY 31, 2019

TO: EMPLOYEE THRIFT ADVISORY COUNCIL

FROM: RAVINDRA DEO - EXECUTIVE DIRECTOR

SUBJECT: CHANGE TO TSP REGULATION ON LOAN ELIGIBILITY 

As you know, the shutdown caused TSP participants to access their accounts through loans and hardship withdrawals.  We saw a 5% increase in loans and a 26% increase in hardship withdrawals since December 26th.  Our regulation currently says that individuals in “non-pay” status are not eligible to take a new loan.  In our Fact Sheet, we state that if the shutdown was going to last less than 30 days, a participant could take a new loan.  We provided that additional time frame as a grace period.  However, that was not sufficient in the most recent partial shutdown. 

As a result, we consulted with the IRS about this issue.  I have made the decision to issue an interim rule that will allow TSP participants affected by a lapse in appropriations to take a loan and to immediately suspend payment on that loan.  This interim rule will be effective immediately.  We will undertake the longer notice and comment rule-making, however, if another shutdown occurs in the near future, we want to be in a position to provide assistance to our participants immediately.

Click here to view the iterim rule.

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