Fedweek

Both the Treasury Department and the TSP have issued statements saying that a financial maneuver the Treasury recently used regarding the TSP government securities G fund will have no impact on investors.

In disinvestment, the Treasury in effect takes the G fund off the government’s books as debt owed, essentially freeing up an equivalent amount of money. The Treasury invoked that maneuver last week after a temporary suspension of the debt ceiling ended, while also using similar accounting maneuvers involving the federal retirement trust fund and certain securities issued to state and local governments. Those maneuvers will put off the need to raise the ceiling until around September.

“After the debt limit impasse has ended, the G fund is made whole,” the Treasury statement said. “Therefore participants in the Thrift Savings Plan who contribute to the G fund are unaffected.”

A TSP statement similarly said that “G fund investors remain fully protected and G fund earnings are fully guaranteed by the federal government. This statutory guarantee has effectively protected G fund investors many times over the past 30 years. G fund account balances will continue to accrue earnings and will be updated each business day, and loans and withdrawals will be unaffected.”

Regardless, many TSP investors resent the actions since the G fund is their money, not a government trust fund.

Although the maneuvers are termed “extraordinary,” they previously were used in 1995-96, 2002, 2003, 2004, 2006, 2011, 2012, 2013, 2014, 2015, 2017, and 2017-2018, the Treasury said.