September 13, 2012

For those not paying child support, beware! Your TSP account is in jeopardy. While TSP investments are safe from garnishment or most other legal process, unpaid child support is an exception.

According to the Office of Child Support Enforcement (OCSE), an office of the Department of Health and Human Services, 86,000 federal employees owe child support. Nationwide according to the OCSE, there were 11.3 million child support cases that were in arrears, of which over 7 million had collections in FY 2010, the last full year statistics were available.

That same year, Thrift Savings Plan administrators began a pilot program with three states to match the names of federal employees owing child support in those states with the names of TSP participants for court action. The TSP averaged four court orders per month that year, according to the Federal Retirement Thrift Investment Board (FRTIB). After expanding the program, through July this year the TSP is up to 1,138 court orders on average per month. If this pace continues, the TSP will have processed over 13,600 court orders for the year, or about 15% of the total number of federal employees who owe child support.

One can only speculate as to why so many feds are late in paying child support, but one thing is certain: paying child support ought to come before investing in the TSP.

Related topics: debt