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Sunday, December 21, 2014

IRS Can Now Withdraw Money from Your TSP Account to Collect on Tax Debts - Pay & Benefits

The Internal Revenue Service can now officially dip into federal employees’ retirement savings to recoup delinquent tax debts.

The Federal Retirement Thrift Investment Board on Wednesday issued a final rule to implement a bill President Obama signed into law in early 2013 making TSP accounts subject to federal tax levies. 

Lawmakers who supported the measure said it corrected a loophole that gave federal employees “special treatment” private-sector employees did not receive.

The board issued a proposed rule in June, which was essentially unchanged in its final iteration. The rule requires FRTIB to notify enrollees that the agency received a levy and that it will be withdrawing funds from the account to pay off the debt.

The IRS has to have “gone through a number of steps” before dipping into a federal employee’s retirement account, according to Kim Weaver, a TSP spokeswoman. The board then has the full account at its disposal to pay debts owed to the tax agency. The levy must be paid in a one-time sum and cannot come from an account that is not yet vested. Finish reading>>