Feds Can Dip Into Retirement Accounts for Harvey Recovery
Overseers of federal employees’ 401(k)-style retirement savings plan have already started receiving requests from participants hoping to tap their savings to help recover from Hurricane Harvey.
On Friday afternoon, the Thrift Savings Plan announced a temporary change in the rules for making “financial hardship” withdrawals, which give employees with certain medical, legal or property expenses early access to money in their retirement accounts. The recent changes make government workers who suffered losses from Hurricane Harvey eligible for such withdrawals.
As of Tuesday afternoon, four federal employees had already requested hardship withdrawals related to Hurricane Harvey, TSP External Affairs Director Kim Weaver told Government Executive. The rules were loosened less than five days ago, and with recovery efforts just getting underway, that number will likely rise in the coming months.
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The nearly 60,000 government employees living or working in the area hit by Harvey, as well as those supporting eligible family members in the region, qualify for withdrawals under the loosened rules. TSP also waived the rule barring employees from contributing to their investments in the six months after making a withdrawal, meaning employer contribution matching still applies.
All Harvey-related withdrawal requests must be submitted to TSP by Jan. 24 with distribution dates before Jan. 31. Employees must withdraw at least $1,000 and cannot request an additional withdrawal for at least six months.
Such changes are common after disaster strikes. TSP implemented similar rules in the aftermaths of hurricanes Matthew and Sandy, and also during the government shutdown in October 2013. With more than 14,000 federal employees turning to retirement investments during that 16-day shutdown, civil servants may find themselves in equally dire straits if Congress fails to pass a budget by the end of the month.
Employees are only eligible for one withdrawal per six-month period, at which point they must re-enroll in the TSP. However, agency officials have noted some employees never return to the program after making hardship withdrawals.