Posted on Friday, 10th February 2023 by

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According to Janet Yellen’s memorandum to congress the U.S. Treasury will be unable to fully invest the portion of the Civil Service Retirement and Disability Fund (CSRDF) not immediately required to pay beneficiaries beginning January 19, 1923. The Postal Service Retiree Health Benefits Fund (PSRHBF) investments will be suspended as well until the debt ceiling is raised.

The Treasury announced temporary G Fund limitations until Congress raises the debt limit. According to the Thrift Savings Plan (TSP), “As of January 23, 2023, the U.S. Treasury was unable to fully invest the Government Securities Investment (G) Fund due to the statutory ceiling on the federal debt.”

The Treasury Department describes the debt limit as the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments.

The debt limit does not authorize new spending commitments. It simply allows the government to finance existing obligations that government made in the past. If a compromise isn’t reached, a government shutdown could occur.

G-Fund Impact

The TSP stated on their website that G Fund investors remain fully protected and guaranteed by the federal government. This statutory guarantee has effectively protected G Fund investors many times over the past 30 years. G Fund account balances will continue to accrue earnings and will be updated each business day, and loans and withdrawals will be unaffected.

Preservation of capital is the G Fund’s investment objective along with generating returns above those of short-term U.S. Treasury securities. Currently, short term 8-week Treasuries are yielding around 4.65% and the G-Fund yielded .34% in January. As the Federal Reserve continues to raise rates, our G-Fund rates will follow suit. If the current .34% rate is maintained through this year it would result in a yield of over 4%.


National Debt Crisis

The IRS collected $4.1 trillion in 2021 and refunded $1.37 trillion for a net collection of $2.973 trillion dollars after refunds. The federal government spent $6.82 trillion dollars in 2021 by borrowed 56.5 cents of every dollar it spent! The federal reserve simply made a book entry for this deficit spending and then purchased that amount of our Treasury bonds to fund the government and flood the country with cash; driving inflation through the roof.

Their excessive spending hasn’t Improved since I wrote Unreasonable Expectations – The Debt Crisis”  January 2021 when the COVID crisis was the excuse for the shortfall.

The Treasury can use special measures to avoid a US payments default. They have until June of this year before we would default on our debt. Our representatives have time to put their heads together, compromise, and come up with realistic ways to cut spending and fund the government. Hopefully, common sense will prevail for the good of the country.

TSP Installment Payments Update

A number of our newsletter subscribers didn’t receive their scheduled installment payments in January as we mentioned in our last newsletter. The TSP posted this clarification on their website last week.

“The TSP has a programming issue that is preventing some participants from setting up installment payments in the amount they desire. We are in the process of addressing this issue. In the meantime, a temporary work-around is for you to request partial withdrawals instead of installment payments until we fix the programming issue. Note: The minimum amount for a partial withdrawal is $1,000, and you must wait at least 30 days between requests.”

I-Bond Interest and Taxes

Madeline asked when she should expect to receive a 1099-INT statement from the Treasury for the I-Bonds she purchased last year. A 1099 is only sent out after you redeem your savings bonds at or sent bonds to them for redemption. If you cashed your paper savings bonds at a local bank, that bank should provide you with your 1099.

You can elect to pay annually if desired. The advantages of savings bonds are that you don’t pay state tax on the interest earned and your interest income is tax deferred until you cash them in.

Savings Bond 1099 Guidance

Helpful Retirement Planning Tools

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change.

The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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