Threats of a government shutdown had little effect on returns for last month’s Thrift Savings Plan, said Tom Trabucco, director of External Affairs at the Federal Retirement Thrift Investment Board.
“There really was not a pop at all,” Trabucco said of any transfers.
Even if there was a shutdown, the TSP would have been “open for business,” he added.
The TSP does not rely on congressional appropriations, so the funds are insulated from the budget process, Trabucco said.
However, the debt limit does affect your TSP. If the government reaches the debt limit without raising the limit – what’s called a debt limit suspension period – the Treasury Department cannot issue new G Fund securities. Treasury Secretary Tim Geithner has said the country will reach the $14.3 trillion debt limit in mid-May.
However, even in this suspension period, TSP investors don’t have to worry. Congress passed legislation in 1987 that ensured the government would repay any investments into the G Fund when a debt limit suspension period is over.
Trabucco said the TSP would “continue to operate as normal even in a debt limit hiatus.”