DorobekINSIDER’s Issue of the Week: No surprise, it’s sequestration. You can see some of the top GovLoop sequestration stories here:
- We Answer Your Sequestration Questions – The What, Why, When of Furloughs
- Know your rights if you’re furloughed
So that means furlough notices could go out as early as Monday. Furloughs would obviously cause a change in your bi-weekly paycheck, so it begs the question, what happens to your TSP if you are furloughed?
Kim Weaver is the Director of External Affairs at the Federal Retirement Trift Investment Board. She told Chris Dorobek on the DorobekINSIDER program that your retirement could be affected by sequestration.
Sequestration Impact?
“Many of our participants will be effected by sequestration so we’ve been doing our best to get word out. In the past, when agencies furloughed employees it was for 5-10 days in a row. This time people are furloughed 1-2 days a pay period. You can either contribute a percentage of your paycheck to the TSP or a fixed sum. If you are contributing a percentage of pay then the percentage of of contribution will decrease. For example, if your bi-weekly pay period pay amount is $1000 you usually contribute $100. If you loose two days of pay your TSP contribution will go down to $80. If it is a fixed contribution then we will continue to receive the same amount from your payroll,” said Weaver.
TSP Loan
“One option is to take a TSP Loan. When you take a loan out you pay it back at the rate of the G-Fund. So the upside of the loan is that you are re-paying money to yourself. But you are paying it back at the rate of the G-Fund, which is certainly lower than the other funds. So you’re not growing as fast as you could otherwise,” said Weaver.
Hardship Withdrawals
“If you are forced to take a hardship withdrawal you take money out of the fund and you can never pay it back. There are also tax penalties in terms of early withdrawal,” said Weaver.
How did the TSP Fair in February?
“February was a decent month for all but the I-Fund. The G-Fund as always was up. The F-Fund was up .5%, C-Fund was up 1.3%, S-Fund was up 1% and the I-Fund was down just shy of 1%,” said Weaver.
Weekend Reads:
- NYT: A lack of a Great Debate
- This is the year of what should be a decisive debate on our country’s spending and debt. But our political “debates” seldom deserve the name. For the most part representatives of the rival parties exchange one-liners: “The rich can afford to pay more” is met by “Tax increases kill jobs.” Slightly more sophisticated discussions may cite historical precedents: “There were higher tax rates during the post-war boom” versus “Reagan’s tax cuts increased revenues.” Such volleys still don’t even amount to arguments: they don’t put forward generally accepted premises that support a conclusion.
- Economist Debates: Business and change
- Do most businesses adapt too slowly to change?
- Fast Company: Why Innovation By Brainstorming Doesn’t Work
- The conventional wisdom that innovation can be institutionalized or done in a formal group is simply wrong. Part of what we know about the brain makes it clear why the best new ideas don’t emerge from formal brainstorming. First, the brain doesn’t make connections in a rigid atmosphere. There is too much pressure and too much influence from others in the group. The “free association” done in brainstorming sessions is often shackled by peer pressure and as a result generates obvious responses. In fact, psychologists have documented the predictability of free association.
- Cash is Nice, but Think About What Might Benefit Both Employees and the Company (Business Horizons)
- What if you could “pay” your employees in such a way as to not only give them something they valued but simultaneously improve their commitment or job-related knowledge? You can. As a reward for high performance, you can give employees the freedom to redesign their jobs, or you can provide extra training. How about giving them a sabbatical? That will get their attention. Herman Aguinis of the Kelley School of Business at Indiana University lays out the options for non-monetary compensation.