As you know, the recent partial government shutdown put a lot of federal workers in a tough spot. Without paychecks, many had trouble making ends meet, even on a temporary basis. Loans for personal expenses can be hard to come by. And many federal workers still haven’t received all the back pay they were promised. Now, the deadline for another shutdown is looming. How will federal employees cope?
Missing pay caused by IBC assumptions meant to speed things up
According to Federal Times, the reason many federal employees didn’t receive their full biweekly pay when post-shutdown checks were issued was an effort to speed those checks up. The issue affected workers paid through the Interior Business Center.
In order to get the paychecks out as soon as possible without overpayments, the IBC applied maximum deductions to every paycheck rather than the actual deductions appropriate to each employee.
That meant that federal taxes were withheld at around 22 percent, state taxes at about 5 percent, Thrift Savings Plan at 10 percent and Social Security taxes at 6.2 percent. That said, TSP loan payments and other individual payments such as alimony, childcare and union dues were not processed. The agency has apparently told workers to deal with those creditors directly, which could be difficult without a full paycheck to pay them with.
IBC says that federal workers should receive their normal paychecks for the Jan. 20 – Feb. 4 period and promised that most of the underpayments will be made up in this next payroll period.
Some workers still haven’t received paychecks at all. According to an email sent to NASA employees, these were people who receive annuities without offset pay, who were scheduled to leave their agencies, who were on leave or who worked less than 64 hours in a particular pay period. The affected employees will be contacted about next steps.
In next shutdown, Thrift Savings Plan participants can borrow from their accounts
The Federal Retirement Thrift Investment Board (FRTIB), which administers the Thrift Savings Plan, has announced that it will allow employees to take out loans with suspended payments in the event of another government shutdown. Only those who enter “non-pay” status due to a lapse in appropriations will be allowed to borrow.
Under the previous rule, federal employees had to be on “pay status” to be eligible for a loan.
A TSP loan is not without costs and does have to be paid back in order for it not to be declared a taxable distribution of a retirement account. The rule would allow the option, however, without major penalties. If another shutdown occurs, details will be posted on the TSP website.