Furloughs could impact TSP accounts
If furloughs occur because of sequestration, federal employees could see their retirement account contributions dwindle in addition to their salaries.
Employees contribute to Thrift Savings Plan accounts either a dollar amount per pay period or based on a percentage of their salary.
Those who use the percentage method will see a decrease for any pay period in which they have furlough days because the amount of money going into accounts is based on actual pay, not regular salary, notes a fact sheet from the American Federation of Government Employees.
That model of "discontinuous" furloughs in which agencies spread out no-work days rather than stringing them together at once in a "continuous" furlough is the more likley should across-the-board cuts slated to begin on March 1 occur. Employees will receive a 30 day notice before furloughs occur.
Should employees go on a continuous furlough that lasts an entire pay period, their TSP account would receive no contribution; TSP guidance notes that "employee contributions must be made through payroll deductions."
Employees on the Federal Employees' Retirement System will receive either reduced or no agency contributions, depending on whether their furlough is spread out or constitute an entire pay period. The 1 percent automatic contributions are calculated based on pay earned during each pay period and the matching contributions are calculated on employee contributions from their pay. Those furloughed an entire pay period will not receive either contribution while those with reduced pay will receive less.
The union also warns those who have existing TSP loans that while loan payments can be suspended when an employee is in nonpay status, suspension is not automatic. Employees must provide TSP with proper documentation and get its approval for the payment suspension, says AFGE.