Federal Government Policy and Business

Q and A for federal workers: The debt limit and the TSP

The Washington Post: Question: If the debt ceiling isn’t raised on time, can the government tap Thrift Savings Plan (TSP) accounts to prevent a default?

Answer: Money in the 401(k)-style TSP is the personal property of account holders — current federal employees (and military personnel) and those who keep their accounts open after leaving.

However, the government can “disinvest” the TSP’s government securities fund (G Fund), which consists of securities the Treasury Department issues each day just for that fund. By not issuing those securities it can remove some of the national debt — the obligation to pay them off — from its books. It actually has been doing that since March, although the money freed up by that and other financial maneuvers also being used will run out around late September.

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