Thrift Savings Plan Lawsuit Alleges Lost Access to Retirement Funds
Military members and federal employees have launched a lawsuit against TSP, The federal government’s tax-deferred retirement plan, also known as the Thrift Savings Plan. The suit alleges these employees lost access to their savings after a TSP system upgrade.
What the TSP Lawsuit Alleges
According to an article in Federal Times, a major system update from the Federal Retirement Thrift Investment Board and Accenture Federal Services in the summer of 2022 “resulted in significant harm to TSP participants,” according to attorneys involved in the class-action lawsuit.
Seven people with TSP accounts are represented in the lawsuit, which alleges that the companies involved with administering TSP “failed to give participants the services that the contract, industry standards, and federal law required.”
Lack of Access to Basic TSP Services
What kinds of services? According to documents filed as part of the class action lawsuit, TSP is meant to let participants withdraw funds from TSP “while they are still active federal civilian workers and members of the uniformed services” if they meet “hardship” requirements or are older than 59.5 years of age.
A Hardship Withdrawal permits taking funds from an individual TSP account if there is a “genuine financial need.”
But the system updates described above created glitches that prevented some users from accessing their funds or looking up data about their accounts. Making a Hardship Withdrawal became impossible for some to do, allegedly due to the errors in the TSP system.
These issues also prevented users from contacting customer support for their accounts. Lawyers involved in the suit say the customers weren’t doing anything unusual with their accounts, simply trying to access the features and support promised to them when they signed up for TSP.
TSP: Less Than Honest About the Issue?
Specific language in the class-action lawsuit filed in the U.S. District Court for the District of Columbia alleges that the entities responsible for administering TSP have been less than forthright in the details of this case.
“Contrary to Defendants’ public representations and legal obligations,” the suit alleges, “widespread complaints detail that the TSP record keepers have failed to process and disburse Hardship Withdrawals, Non-Hardship Active Withdrawals, Out of Service Withdrawals, Death Benefits, and TSP Loan proceeds” for literal weeks or months, “despite approving participants’ applications and accepting their application fees.”
That potentially leaves TSP members, including military, veterans, and federal employees, “stuck waiting for money they timely and properly requested, and that TSP promised to them, while bills and other expenses continue to pile up.”
One example cited in the Federal Times article notes that one TSP contributor had to wait six months to finally receive payment for an allowed TSP withdrawal.
Read more: Maximize Your TSP Retirement Fund
What Happens Next?
The plaintiffs in this class-action lawsuit have demanded a jury trial, financial damages, and a public statement by the entities running TSP that they are “responsible” for the possible financial losses of those who participated in the program.
About the author
Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter/editor for Air Force Television News and the Pentagon Channel. His freelance work includes contract work for Motorola, VALoans.com, and Credit Karma. He is co-founder of Dim Art House in Springfield, Illinois, and spends his non-writing time as an abstract painter, independent publisher, and occasional filmmaker.