Will feds eye TSP as fast cash in shutdown?

Wednesday - 2/23/2011, 3:34pm EST

Tom Trabucco, director of external affairs, Federal Retirement Thrift Investment Board

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Pay freeze, furloughs and a possible government shutdown -- Do these factors have you eyeing you Thrift Savings Plan account for some fast cash?

Tom Trabucco, director of external affairs at the Federal Retirement Thrift Investment Board, told host Francis Rose that withdrawing from the TSP means you have to time the market right twice - both when you take out the funds and when you put them back in.

"We just keep reminding people that it's a long-term investment in the TSP and these events are going to come and go," Trabucco said.

The TSP call center has started to receive inquiries about the potential shutdown, but the concern has not translated in fund activity. Trabucco said he has not noticed any increase in loans.

Although interfund transfers increased Tuesday, Trabucco said the jump was probably due to the three-day weekend and the stock market drop.

If you take out a loan, it's at the G Fund interest rate and you pay yourself back as though it were an investment in the G Fund, Trabucco said.

You can pay it back through payroll withholding, or loan payments can be sent in early and as partial payments. In the past, the only way to make payments was through payroll withholding, he said.