Two examples given in the class action suit showed that participants suffered financial harm from the botched transition. Image: Sergej Razvodovskij/Shutterstock.com
By: John Grobe, Federal Career ExpertsIt’s been over a year since the Thrift Savings Plan implemented a new record-keeping contract, with Accenture and Alight being the new service providers. The implementation was riddled with problems, and problems continue to this day. In fact, the problems were so severe that about a month ago several TSP participants filed a class action lawsuit over the botched implementation.
Almost immediately after the new system was introduced, the federal press began hearing complaints about participants being locked out of their accounts and long wait times for those who called in to the ThriftLine. It was reported in several articles that the call center was understaffed due to an underestimation of the number of expected calls.
Problems soon arose with beneficiary designations. Participants who had filed valid forms TSP-3 found that their account was listed as having no beneficiary. I frequently heard this complaint from participants in retirement seminars I taught. In fact, on June 22, 2023, a participant in one of my classes checked their TSP account to see if their beneficiary information was correct. Imagine their surprise when their wife was not listed as their beneficiary, but the TSP did have information on her and listed her birthdate as January 1, 1800. Yes, she was born in the Adams administration. A 223-year-old should be in the Guinness Book of World Records, not in the Thrift Savings Plan. If you haven’t recently gone to your TSP account, it would be in your interest to do so soon and to check your beneficiary information.
The new record-keeping system was to pay out monthly installment payments on the 15th of the month. In the case of my wife’s account that has never happened. Payments have been posted as late as the 19th of the month.
The TSP notifies you twice when your installment payment is made once by email and once by snail mail. I wonder how much these snail mail notifications cost?
When the system was implemented, those who were receiving installment payments based on the IRS life expectancy table (a not-insubstantial number of participants), had their payments re-calculated based on their account balance at the end of May. This resulted in lower payments for the remainder of the year and caused many of the participants to be concerned about not having enough money taken out over the course of the year to satisfy their required minimum distribution; I fielded several questions on this issue.
Well, the TSP came through on this one; they sent additional payments to all participants who were following the life expectancy table so that they did receive the full amount of their required distribution prior to December 31st.
Two examples given in the class action suit showed that participants suffered financial harm from the botched transition to Accenture/Alight. One participant had a loan approved in July and the monies were taken from his account at that time. He didn’t receive the money until December 29th, though the TSP dunned him for missed payments during the interim. He had to pay significantly higher interest to get the money he needed in a timely manner.
Another participant spent over $400 in postage and delivery costs when she had to send documentation of her spouse’s death 13 times to the TSP and ended up waiting two months to have the matter taken care of. (The TSP has stated to FEDweek that it cannot comment on pending litigation.)
There have been complaints about the ease of navigating the revised website, and several of the more useful TSP calculators are no longer to be found.
We’ll keep you updated on the progress of this lawsuit.
John Grobe, President of Federal Career Experts, is an expert in the area of federal employee retirement and benefits. This expertise comes from his 26 year federal career in which he managed the retirement program in a 3,500-employee office of a large federal agency.
5 Steps to Protect Your Federal Job During the Shutdown
Over 30K TSP Accounts Have Crossed the Million Mark in 2025
The Best Ages for Federal Employees to Retire
Best States to Retire for Federal Retirees: 2025
Primer: Early out, buyout, reduction in force (RIF)
See also,
OPM Guidance Addresses Pay Issues arising During, After Shutdown
