Senate Passes Bill to Make Thrift Savings Fund Accounts Subject to Federal Tax Levy
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On January 1st, the Senate passed HR 4365, which amends the IRS Code to make clear that TSP funds are subject to IRS levy for payment of delinquent taxes. The bill had passed the House of Representatives in August of this year. The legislation would bring the TSP in line with private sector 401(k) savings plans, which are already subject to such a levy. It also codifies a decision by the Department of Justice’s Office of Legal Policy that the IRS was within its rights to collect the levy from the Thrift Savings Fund.
Generally, TSP funds are protected from execution, levy attachment, garnishment, or other legal processes. They are subject to a narrow set of court orders including child support, alimony, property settlement or some national security offenses and now, delinquent taxes. The bill goes to the President, who is expected to sign the bill.
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