Due to the most recent government shutdown, the TSP has issued new guidance on investment catch-ups and loan policies for account holders in a non-pay status. As TSP had previously said regarding loans, is that it is not necessary for the present for employees to have a form showing they are in non-pay status submitted by their agencies. After the borrower misses two and a half payroll deduction loan repayments and is notified and given a chance to make it up, those forms will be used to put the loan in ‘suspended’ status and avoid them being declared being in default.
TSP said that those who have outstanding loans and miss one or two payments will not be affected immediately provided that payments are up to date at the beginning of the furlough.
Also, legislation has been signed into law guaranteeing backpay to those furloughed. Agencies are to deduct the missed investments and also make deductions for any loan payments missed, for employees with loans. This is to be done when employees receive that back pay. Those deductions will be adjusted for gains or losses that the investor would have experienced, if they are made beyond 31 days from the date they would have been made normally.
TSP added that it may take 2-5 business days to process the files once received due to the expected volume of agency submissions. Lastly, more guidance will be provided on how agencies should submit payroll files to avoid errors to participant contributors and ensure that participants with loans are not negatively affected as soon as more information is available.