What Happens to Federal Workers’ Thrift Savings Plan Assets After Being Terminated?

As government employees experience mass terminations, they await instructions on how to handle their retirement funds.

Since President Donald Trump came into office, more than 200,000 federal workers at more than a dozen federal departments and agencies have been terminated from their jobs.

Many of these employees were also participants in the federal Thrift Savings Plan, the defined contribution retirement system for the federal workforce and some members of the military, and now have questions about what happens to their retirement savings and how they can continue to manage their accounts.

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The mass cuts stem mainly from efforts by the recently formed Department of Government Efficiency Service Temporary Service Organization, led by Elon Musk, to drastically downsize the federal government. On February 13, the Trump administration ordered agencies to lay off all probationary employees—generally, those on the job for less than one year and who have yet to gain civil service protection. According to government data maintained by the Office of Personnel Management, 220,000 federal employees had less than one year of experience in their job, as of March 2024.

About 75,000 federal employees also accepted offers of deferred resignations in exchange for financial incentives to leave their jobs by February 6.

The TSP operates similarly to a 401(k) in which the funds are held in a trust for each individual participant.

A spokesperson at the TSP said this week that any participant who separates from federal service should receive a notice that they do not need to take their assets out of the TSP. It is unclear whether the recently terminated employees have received any notices from TSP yet. Notification is largely dependent on the agency or service sending a separation code to the TSP, which may not happen for several days or weeks after a participant’s final working day, according to the spokesperson. Once the agency or service sends TSP the separation code, the TSP immediately notifies the participant.

While former employees can no longer make employee contributions, they can still manage their investment mix, transfer eligible money into their account and allow their investments to grow while taking advantage of the TSP’s low expenses.

The spokesperson said TSP participants can manage their accounts online, through an app or over the phone. He declined to provide any insight into or estimate of the value of assets owned by terminated employees.

In February 2024, the Federal Retirement Thrift Investment Board reported that the plan had $845 billion in assets under management and approximately 7 million participants and beneficiaries at the end of 2023.

In 2022, the Federal Retirement Thrift Investment Board awarded a new recordkeeping contract to Accenture Federal Services.

When employees are covered by the Federal Employee Retirement System, which includes the TSP, they receive agency automatic contributions of 1% and agency contributions matching their own contributions. Agency contributions stop when an employee is no longer being paid status.

According to the fact sheet “Information for TSP Participants Leaving Federal Employment” posted on the TSP.gov website, if participants have TSP loans when they separate from federal employment, they must decide if they want to pay them off, keep them open and set up monthly repayments or allow them to be foreclosed and accept the outstanding balance and accrued interest as taxable income.

The IRS began laying off more than 6,000 new and newly promoted employees on Thursday, and cuts have also been made at the Social Security Administration. The acting commissioner of the SSA resigned last week after refusing to give DOGE employees access to beneficiary information. The Department of Labor and the Department of the Treasury appear to have not yet been hit, but cuts are expected to continue across agencies.

Several unions representing federal employees filed a complaint on Wednesday in U.S. District Court for the Northern District of California to block the mass firings of probationary federal workers by the Trump administration, alleging that the firings are illegal and that officials are exploiting and misusing the probationary period to eliminate staff.

On Thursday, District Judge Christopher Cooper ruled that a different complaint filed in the District of Columbia by the National Treasury Employees Union must be heard by the Federal Labor Relations Authority, rather than the U.S. District Court, which Cooper wrote “likely lacks subject matter jurisdiction.”

The unions are seeking an injunction to stop more firings and to rescind those that have already happened.

Retirement Industry People Moves

Pennsylvania PSERS announces the retirement of Executive Director Sanchez; Wilmington Trust names DiLuigi head of US Markets; Lopes joins Nationwide retirement solutions.

Pennsylvania PSERS Announces Retirement of Executive Director Sanchez 

Terri Sanchez

The Public School Employees’ Retirement System of Pennsylvania announced Friday that Executive Director Terrill “Terri” Sanchez will retire later this year.

Sanchez submitted her letter of resignation, effective June 27, to the board of trustees and informed her staff of her retirement intentions on Friday. Sanchez is the first woman to hold the position of PSERS executive director since the system’s statutory founding in 1917.

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Sanchez joined Pennsylvania PSERS in 1987 as a computer science management trainee and eventually rose to the position of deputy executive director.

She left PSERS in April 2018 to become executive director of the Pennsylvania State Employees’ Retirement System and retired from Pennsylvania SERS in December 2021.

She came out of retirement and rejoined  PSERS in an emergency capacity in January 2022 to fill a leadership vacancy as interim executive director and was named executive director five months later.

 

Wilmington Trust Names DiLuigi Head of US Markets

Dave DiLuigi

Wilmington Trust announced that Dave DiLuigi was named the new head of U.S. Markets for the firm’s wealth division, effective February 17. DiLuigi succeeds Lisa Roberts, who became head of wealth for Wilmington Trust last year.

DiLuigi will be responsible for setting the strategic direction for Wilmington Trust’s wealth business and managing the firm’s wealth management advice services. He will also join the Wilmington Trust senior leadership team.

Based in Washington, D.C., DiLuigi had previously served as the regional president for the Greater Washington/Central Virginia and Greater Baltimore regions of Wilmington Trust, overseeing all wealth advisory services in those markets.

Wilmington Trust’s wealth business—part of parent company M&T Bank Corp. —works closely with high- and ultra-high-net-worth individuals, families, entrepreneurs, business owners, foundations and endowments and their advisers.

Lopes Joins Nationwide Retirement Solutions

Darren Lopes

Nationwide Retirement Solutions announced that Darren Lopes has joined the company’s institutional consultant relations team as consultant relations manager covering the Northeast region of the U.S.

Lopes reports to Andee Gravitt, associate vice president of institutional consultant relations.

“Darren’s 30-plus years of experience in the retirement services industry, most of which was focused on serving consultants in the Northeast, positions him perfectly for this role,” Gravitt said in a statement.

Lopes’ previous experience includes roles as a managing director for TIAA’s institutional sales team and as a relationship manager at Fidelity. 

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