Thrift Savings Plan Funds May Be Used to Avoid Government Default

February 19, 2003 12:00 AM , Updated August 18, 2016 4:53 PM
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Government red ink is flowing fast. It’s hard to imagine but the debt ceiling of $6.4 trillion will probably be reached on Thursday. Raising the debt ceiling will require an Act of Congress.

This happens on a fairly regular basis. What you may not know is that Federal employees will help the government avoid defaulting on its obligations.

Here’s how. The debt ceiling will not be raised by Thursday. to ensure the government can continue spending, the Treasury Department will use different mechanisms to keep money flowing. One method it will use is to suspend investing billions of dollars of investments by Federal employees in the G fund of the Thrift Savings Plan.

It isn’t likely this will have any long-term impact on your investments though. This method has been used before and the Treasury keeps track of the interest the fund would have earned if the usual investments had taken place. The government replays the money after the debt ceiling is lifted.

© 2020 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.


About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources. Follow Ralph on Twitter: @RalphSmith47