Loans and Withdrawals From TSP Way Up
With the federal government still shut down since October 1st and federal employees no longer receiving paychecks, it is not surprising that some are using their Thrift Savings Plan (TSP) funds to meet expenses.
At its monthly meeting, the Federal Retirement Thrift Investment Board (FRTIB) reported that there has been a 35% increase in loans and a 15% in withdrawals from the TSP compared to the same period in 2024.
The Thrift Savings Plan is up and running despite the government shutdown. This notice is from the TSP:
Government Shutdown on 10/01
- TSP remains open
- ThriftLine and MyAccount are available for all transactions
- Active participants with TSP loans remain in good standing
- Updates available at tsp.gov/shutdown
There has also been a 23% increase in phone calls from TSP participants in recent weeks. A TSP spokesman said feedback from TSP participants seeking advice or assistance has been very favorable, with a reported satisfaction rate of 94%.
Here are some of the comments received by the TSP about their service during this shutdown period:
TSP Participant Feedback
“Easy experience. Fast and much appreciated with the staff working so swiftly during the gov shutdown.”
“TSP.com has been a true lifesaver especially with the current government shutdown. With the ease of requesting a loan and the money transferring to my account so quickly I have been less stressed while being furloughed.”
“I needed to change my beneficiary due to the death of my husband. Despite the government shutdown I was speaking with a live person within minutes. The agent was compassionate and extremely helpful. The entire process took very little time. I’m grateful.”
Interfund Transfers in September
About $3 billion was transferred out of the C Fund by TSP participants in September. About $1.5 billion was transferred into the S Fund, and smaller amounts were transferred to the other core TSP Funds.
Some of the money was probably withdrawn by people needing money to pay expenses during the shutdown. Others may have been looking at the recent records set by the stock market as the bull market continues to reach new heights.
New performance records in the stock market mean that returns have been good for investors. It can also mean there is a greater likelihood of a lull in investor optimism, and that the excellent returns from stocks are more likely to turn down after setting new records than to keep rising.
Here is how the core TSP Funds have performed recently. Also, in 2024, the C Fund posted a return of almost 25%, while the S Fund returned almost 17%.
| Fund | Month-to-Date | Year-to-Date |
|---|---|---|
| G Fund | 0.32% | 3.67% |
| F Fund | 1.29% | 7.51% |
| C Fund | 2.86% | 18.08% |
| S Fund | 2.71% | 14.20% |
| I Fund | 2.96% | 29.05% |
Stocks are Still in a Bull Market
The current bull market in stocks (when stocks are going up for strong underlying reasons) is about three years old. Here is one observation from a financial publication:
U.S. stocks are nearing the three-year anniversary of the current bull market, powered in part by a resilient economy and megacap tech gains. They could extend their record run into the second half of the decade as Federal Reserve rate cuts make the backdrop even more favorable.
The reality is that no one knows when stocks will go up or down. Bull markets typically last longer than bear markets. A bull market in the 1990s lasted about 4,500 days, with gains of 582%. Every bull market has a period when stocks and stock market indexes correct by 10% or more, so even in a bull market, investing is not always clear sailing for investors.
A persistent theme in this bull market has been the increasing influence of technology, and in particular the emergence of artificial-intelligence (AI)-driven growth. That belief helps drive investor sentiment and the perceived value in stocks.
Some analysts are advising investors that we may be entering a mature phase of the bull (further gains possible but more risk), given the length and magnitude of the run so far.
So, as usual, there is plenty of advice on whether this is a good (or bad) time to invest in the stock market. Even with the influence of artificial intelligence, no one can predict the future with any certainty.
