Gregory Long, executive director of the Thrift Savings Plan, said the plan's G Fund saw an influx of about $2 billion during the recent government shutdown. (Thomas Brown/ Staff)
Hardship withdrawals from the Thrift Savings Plan soared during the partial government shutdown in the first half of this month, according to data released Monday.
During the shutdown, which ran from Oct. 1 to Oct. 16, the number of hardship withdrawals totaled about 8,200, compared to 5,500 for the same period last year, said Veronica Mance, policy research officer at the Federal Retirement Thrift Investment Board, during the TSP board’s monthly meeting.
The numbers have since returned to normal levels, Mance said, while the volume of TSP participants borrowing from their accounts remained about the same.
During the shutdown, jittery account holders also moved their money between TSP funds at a much higher rate than normal. For the 16-day period, the number of such transactions was 128,000, or more than for all of September, Mance said.
The G Fund, which is invested in ultra-safe short-term government bonds, saw an influx of some $2 billion, said Greg Long, the board’s executive director.
Because TSP savings are intended for retirement, IRS rules exact a stiff price from account holders who take money out early. Besides charging a 10 percent early withdrawal penalty, the board withholds 20 percent for income taxes and bars those participants from making new contributions to their accounts for six months, spokeswoman Kim Weaver said.
As of the end of September, the number of hardship withdrawals for 2013 stood at about 104,300, almost 11 percent above last year’s pace.
The shutdown ended when President Obama signed a continuing resolution to put agencies back in operation through mid-January and effectively raised the federal debt ceiling until Feb. 7.
As a result, the G Fund has been made whole with “zero” impact on participants, Long said.
Because G Fund bonds count against the debt ceiling, the Treasury Department suspended new investments in May as one of several “extraordinary” actions to hold down borrowing and buy time before the nation hit the limit. The fund has since been credited with almost $653 million in interest, Weaver said.