Your TSP During Government Turmoil: What to Know in 2026

Last Updated: March 22, 2026 Reading Time: 10 min

Between government shutdowns, DOGE-driven RIFs, and stock market drops, federal employees have plenty of questions about their TSP right now. The good news: your TSP is legally separate from the federal budget, and nobody can raid it. The bad news: market volatility is real, and panic moves can cost you more than the downturn itself.

Here's what's actually happening with TSP in 2026, what you need to watch, and what history says about making moves during turmoil.

Key Takeaways

• Your TSP account keeps running during shutdowns, but contributions pause until back pay arrives. You don't get credit for missed investment gains during the gap.
• As of March 20, 2026, the C Fund is down 4.7% and the S Fund is down 3.2% for the year. The I Fund erased its 12% gain from January-February and sits at 0.0%.
• Employees who moved to the G Fund during the 2018-19 shutdown missed an 8% C Fund rebound in January 2019 alone, and 31% for the full year.
• A RIF does not touch your TSP balance. Your money stays, and agency matching is immediately vested.
• The 2026 contribution limit is $24,500 (not $23,500, which was the 2025 limit). Age 50+ catch-up brings it to $32,500.

How TSP Funds Are Performing in 2026

Let's start with the numbers everyone is checking.

YTD Returns as of March 20, 2026

Fund	YTD Return	What It Tracks
G Fund	+0.9%	Government securities
F Fund	-0.6%	U.S. bond index
C Fund	-4.7%	S&P 500
S Fund	-3.2%	Small/mid-cap stocks
I Fund	-0.0%	International stocks

Source: TSPfolio.com

The I Fund was the story through February, up over 12% on dollar weakness and global capital rotation. March erased all of it. Three forces are hitting stock funds right now:

1. Tariff uncertainty. Goldman Sachs estimates U.S. consumers will absorb 67% of tariff costs by mid-2026, dragging corporate earnings.
2. DOGE spending cuts. Federal budget contraction is reducing aggregate demand across the economy.
3. Geopolitical risk. Iran-related tensions are pushing energy prices higher and disrupting trade routes.

The Russell 2000 (which the S Fund broadly tracks) entered correction territory in March, down 10% from its recent high.

Your TSP During a Government Shutdown

This is the most common question right now. Here's what actually happens.

What Stops

• Your contributions. No paycheck means no payroll deduction. Your TSP contributions pause.
• Agency matching. Both the 4% match and the 1% automatic contribution stop.

What Does NOT Stop

• Your account. The TSP is run by the FRTIB, which is not funded through annual appropriations. It keeps operating.
• Interfund transfers. You can still move money between funds.
• TSP loans. You can request a new loan during a shutdown. Existing loan payments are protected and re-amortized afterward.
• TSP.gov and the ThriftLine. All services stay online.

When the Shutdown Ends

Your missed contributions get deducted from back pay and sent to TSP. But here's the catch most people miss: you don't get credit for any investment gains or losses during the gap. If the C Fund went up 5% while your money was sitting on the sideline, you missed it. There's no retroactive earnings adjustment.

This is why some financial advisors recommend keeping emergency savings so you can make manual contributions during a shutdown, though this isn't practical for everyone.

Why Moving to the G Fund During Downturns Usually Backfires

With the C Fund down 4.7%, it's tempting to move everything to the G Fund. The G Fund is earning about 4% annualized right now, and it's guaranteed to never lose nominal value.

The data on market timing with TSP is clear, though. It almost always costs you money.

The 2018-19 Shutdown: A Case Study

The 35-day government shutdown from December 22, 2018 to January 25, 2019 is the clearest test case.

At the end of 2018, the C Fund was down 4.41% and the S Fund was down 9.26%. Federal employees were nervous. Many moved to the G Fund.

Here's what they missed:

Fund	January 2019 Return	Full Year 2019 Return
C Fund	+8.01%	+31.45%
S Fund	+11.64%	+27.97%

Source: FedSmith

Employees who stayed in stock funds saw their accounts recover within weeks and end the year up over 30%. Those who moved to G captured about 2.5% for the year instead.

The 2013 Shutdown

During the 16-day October 2013 shutdown, the S&P 500 actually climbed 3.1% during the shutdown itself. One year later, it was up nearly 20%.

The Pattern

Markets tend to recover before the news gets better. By the time a shutdown ends and the headlines calm down, the rebound has already happened. Anyone sitting in the G Fund at that point has locked in their losses and missed the recovery.

The right framework: If you have 10+ years to retirement, stay in your current allocation. Rebalance annually, not in response to headlines. Only shift if your actual time horizon or risk tolerance has fundamentally changed.

What Happens to Your TSP If You Get RIF'd

With DOGE-driven reductions and agency restructuring, more federal employees are facing this question than at any point in recent memory.

Your Balance Is Safe

A RIF does not touch your TSP balance. Your money stays in your account, continues to be invested, and remains subject to market movements. You can still make interfund transfers after separation.

Vesting: One Thing to Watch

Contribution Type	Vesting
Your contributions	Immediately vested, always yours
Agency matching (up to 4%)	Immediately vested, always yours
Agency automatic 1%	Requires 3 years of service

If you have less than 3 years of federal service and get RIF'd, you'll forfeit the 1% automatic contributions and their earnings. Everything else is yours.

Your Options After Separation

1. Leave it in TSP. This is often the best option. TSP has some of the lowest expense ratios of any retirement plan in the country. There's no rush.
2. Roll over to an IRA. Gives you more investment options. Roth TSP rolls to Roth IRA, Traditional to Traditional. Use a direct rollover to avoid taxes.
3. Roll over to a new employer's plan. If your next employer's 401(k) accepts rollovers.
4. Take withdrawals. Subject to income tax, plus a 10% early withdrawal penalty if you're under 59 and a half.

The Age 55 Rule

Pay attention to this one if you're being RIF'd near retirement. If you separate from federal service in or after the year you turn 55, you can take TSP withdrawals without the 10% early penalty. That's a significant advantage over rolling to an IRA, where you'd need to wait until 59 and a half.

Use our Severance Pay Calculator to estimate your separation package alongside your TSP options.

2026 TSP Contribution Limits

A lot of sites still show the 2025 numbers. Here are the correct 2026 limits:

Category	Annual Limit
Under age 50	$24,500
Age 50+ catch-up	+$8,000 = $32,500 total
Age 60-63 (SECURE 2.0 super catch-up)	+$11,250 = $35,750 total

Source: TSP.gov Bulletin 25-3, IRS

Note: If your wages exceed $150,000 in 2026, catch-up contributions must go into the Roth TSP option. This is a new IRS requirement.

New in 2026: Roth In-Plan Conversions

Starting January 28, 2026, you can convert pre-tax TSP balances to Roth TSP within your account. You'll pay income tax on the converted amount now, but future growth and withdrawals become tax-free.

For employees in lower tax brackets — possibly due to reduced hours during a shutdown — this is worth a look. Locking in lower rates on conversions now could pay off significantly in retirement.

Model Your TSP Growth

Use our free TSP Growth & Withdrawal Calculator to project what your balance looks like under different scenarios. Model the impact of staying invested vs. moving to the G Fund over 10, 20, or 30 years.

Try the TSP Calculator now

Frequently Asked Questions

Does the government shutdown affect my TSP contributions?

Yes. Payroll deductions stop when you're not getting paid, so your TSP contributions pause. But your account stays fully operational. You can still make interfund transfers, request loans, and access TSP.gov. When the shutdown ends, missed contributions are deducted from back pay, but you don't get credit for any investment gains or losses during the gap.

Should I move my TSP to the G Fund during volatility?

History says no, especially with 10+ years to retirement. Employees who moved to the G Fund during the 2018-19 shutdown missed an 8% C Fund rebound in January 2019 alone, and a 31% full-year gain. The G Fund earns about 4% right now, which won't outpace inflation long-term. Stay in your age-appropriate allocation unless your actual timeline has changed.

What happens to my TSP if I get RIF'd?

Your TSP balance is yours and stays in your account. Agency matching is immediately vested. The only money at risk is unvested 1% automatic contributions if you have less than 3 years of service. After separation, you can leave it in TSP, roll it to an IRA, or take withdrawals. If you separate at age 55 or later, you can withdraw without the 10% early penalty.

Can I take a TSP loan during a government shutdown?

Yes. You can apply for and receive a new TSP loan during a shutdown. If you have an existing loan, missed repayments won't cause a default. The TSP re-amortizes your loan after the shutdown ends. Interest does continue to accrue on missed payments.

What are the 2026 TSP contribution limits?

The 2026 elective deferral limit is $24,500. Employees age 50 and older can add $8,000 in catch-up contributions for a total of $32,500. Employees turning 60 through 63 in 2026 qualify for the SECURE 2.0 super catch-up of $11,250, bringing the total to $35,750.

Is my TSP safe from DOGE budget cuts?

Yes. TSP assets are held in individual participant accounts, legally separate from the federal operating budget. The FRTIB, which manages the TSP, is funded by participant fees, not annual appropriations. Neither Congress nor DOGE can access your TSP balance.

Related Resources

• TSP Growth & Withdrawal Calculator: Project your balance under different allocation scenarios
• TSP 2026 Changes Overview: What changed for TSP this year
• Best TSP Allocation Strategy for 2026: Age-based fund recommendations
• What Happens to TSP When You Leave Government: Full separation guide
• I Fund Volatility and Rebalancing Guide: Deep dive on international fund strategy
• RIF Survival Guide 2026: Everything you need if facing a reduction in force
• Severance Pay Calculator: Estimate your separation package

Sources: TSP.gov, IRS.gov, TSPfolio.com, FedSmith, OPM.gov