If you are a federal employee with outstanding tax debts, you may find that money from your TSP account (Thrift Savings Plan) is garnished to make good on those debts.
The Federal Retirement Thrift Investment Board (FRTIB) issued a final rule on September 10 in the Federal Register that makes TSP accounts (Thrift Savings Plan accounts)subject to federal tax levies.
While this new rule might seem insignificant, the IRS has recently reported that collectively, federal workers owe $3.3 billion in back taxes. This new rule may help to collect some of that money.
TSP accounts will be frozen after the TSP (Thrift Savings Plan) receives a qualifying tax levy or criminal restitution order. After the participant’s account is frozen, no withdrawal or loan disbursements will be allowed until the account is unfrozen. All other account activity will be permitted, including contributions, loan repayments, adjustments, contribution allocations and interfund transfers. Once a disbursement from the account is made in accordance with the restitution order or levy, the hold will be removed from the participant’s account.
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