With a temporary suspension of the federal debt ceiling expiring today (March 15) the Treasury Department is expected to take what it calls “extraordinary measures” including “disinvesting” the TSP’s government securities G fund. The G fund is the largest of the TSP’s investment funds and is especially popular with retirees and those nearing retirement, since it by design never suffers a loss. Here’s the TSP’s explanation of what disinvestment means: “The G fund is invested in short-term U.S. Treasury securities specially issued to the TSP. As a result, the G fund can be affected when the statutory debt limit is reached. However, the principal and interest payments on these securities are guaranteed by the U.S. government. When it reaches the debt limit, the Treasury has to find ways to manage its cash and borrowing so that it can continue funding government activities. One of the many ways it can do this is by suspending investments of the G fund. As a G fund investor, you should know that if the Treasury takes this action, your investment is always protected, and your G fund earnings are fully guaranteed by law under the Thrift Savings Plan Investment Act of 1987. Your G fund account balance would be exactly the same from day- to-day as if it were invested in Treasury securities. It will continue to accrue earnings and be updated each business day, and loans and withdrawals will be unaffected.” Despite that lack of direct impact, many TSP investors strongly resent any such maneuvering with G fund money, which is the personal property of the investor, not a government trust fund.
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