The Covid-19 crisis has imposed unexpected financial burdens on many of us. If you are a federal employee and experiencing financial hardship due to the coronavirus pandemic, it’s good to know that there are resources out there to help.
First, if you participate in the Thrift Savings Plan (TSP), you can now access your TSP savings more easily. As part of the Cares Act, Congress has made it easier for you to borrow against or withdraw your savings. You must be able to show that either you or your spouse or family member has been diagnosed with COVID-19, or that you are experiencing severe financial loss due to the work and business disruptions caused by the virus. Ordinarily, an early TSP withdrawal based on financial considerations will incur a 10% penalty on the amount of the withdrawal, in addition to any tax you may owe on the funds withdrawn. However, if you qualify and indicate that your withdrawal was caused by the coronavirus, the IRS will waive the penalty. You 1) may be able to borrow up to 100% of your TSP savings; 2) may be able to suspend payments on your TSP loans for 12 months; and 3) may even be able to make a one-time withdrawal of up to $100,000 – even if you have not reached age 59 ½ or demonstrated the specific hardship generally required for such a withdrawal. Moreover, if you withdraw TSP funds in 2020, you can declare them over the next three years to reduce the tax burden. For example, if you withdraw $9,000 this year because of the virus, you may have the option to declare $3,000 for the tax years 2020, 2021, and 2022. These special conditions regarding access to your TSP funds under the CARES act has strict deadlines, so be sure to check with HR and don’t delay acting.
And don’t forget the Federal Employee Education and Assistance Fund (FEEA). This organization has been around since 1986 and provides emergency financial assistance and scholarships to civil federal and postal public servants and their families. FEEA is offering loans of up to $1,000 to federal employees who are themselves sick with COVID-19, are caring for someone with COVID-19, or are unable to work due to quarantine, and who have wholly exhausted all of their annual, sick, advanced and FFCRA leave. They also are helping by providing bridge grants to spouses or children of federal employees who have passed away due to COVID-19. Their web page is worth a visit: they have gathered lots of helpful pandemic-related links in one place. And you can even apply there to receive a fabric mask, if you are working in direct contact with the public or have returned to a worksite with other employees.
The financial hardships to federal employees from the pandemic are real. It’s good to know there are some resources available to help.