The TSP has issued new guidance on loan policies and investment catch-ups for account holders in non-pay status due to the partial government shutdown.

Regarding loans, the TSP said—as it had previously—that it is not necessary for the present for employees to have their agencies submit a form showing that they are in non-pay status. Those forms would be used to put a loan in “suspended” status and avoid a declaration that they are in default, which happens after the borrower misses 2 ½ payroll deduction loan repayments and is notified and given a chance to make it up.


“Participants who have outstanding loans and miss one or two payments will not be immediately affected if payments were up to date when the furlough began. We identify loans that are behind by more than 2.5 payments at the end of each quarter. The next time we will identify participants whose loans are at least 2.5 payments behind is scheduled for the end of March 2019. At that time, those affected will be notified and will have until the end of June 2019 to make up missed payments,” the TSP said.

It also noted that that legislation has been signed into law guaranteeing back pay to those furloughed—back pay previously had been guaranteed to those kept on the job but unpaid. When employees receive that back pay, agencies are to deduct the missed investments; agencies also are to make deductions for any loan payments missed, for employees with loans.

Further, if those deductions are made beyond 31 days from the date they normally would have been made, they will be adjusted for gains or losses that the investor would have experienced. “Due to the expected volume of agency submissions, it may take us 2-5 business days to process the files once we receive them,” it said.

“As more information is available, we will provide additional guidance on how agencies should submit payroll files to avoid errors to participant contributions and to ensure that participants with loans are not negatively affected,” it said.