Editor’s note: This story was updated at 12:26 p.m. EST on Friday, June 2 to include updated comments.
Military and civilian users of the the federal government’s Thrift Savings Plan, the popular tax-deferred retirement savings program for millions of government employees, filed a lawsuit alleging that they lost access to their funds following a modernization of its system.
Attorneys representing current and former service members and federal employees who filed the complaint on June 1 say their clients have experienced financial hardships due to complications that arose after Federal Retirement Thrift Investment Board, which oversees the program, hired contractors to revamp the customer interface.
The TSP, which has some $800 billion in assets, announced a year ago that it was standing up a new online portal to improve cybersecurity and usability. The rollout was fraught with glitches and complaints from users who said they couldn’t access their funds, look up historical records or reach a customer service representative.
“In many instances, they were simply trying to withdraw their own money from the TSP,” and were unable to do so, said Joseph Sauder of Sauder Schelkopf, a class action and personal injury law firm based in Pennsylvania.
The complaint, which seeks class-action status, alleges that issues with the conversion causes TSP participants “to suffer actual injury, economic damages, and other injury and actual harm.” The suit, led by four legal firms based in different cities, claims that the TSP failed to process funds in a timely fashion in violation of the the Federal Employee Retirement Systems Act of 1986, which ultimately led to users falling behind on bills or having to take out loans while they were waiting.
“We have been contacted by hundreds of people and will know more as the case progresses,” said Sauder. When asked about next steps, he said defendants will likely file a motion to dismiss, and the court will rule. If the case moves forward, there will be discovery before any class certification motion is filed.
Hardship Withdrawals
The burgeoning suit also puts some of the onus on the Federal Retirement Thrift Investment Board, an agency of five presidentially appointed members. The board had decided that it was going to enlist the help of contractors to manage TSP record-keeping. A contract was awarded in November 2020 to Accenture Federal Services and Alight Solutions — two of the named defendants in the complaint.
Before the award was made, the request for proposal aimed to ensure a “successful transition with a minimal blackout period while retaining the confidence and trust of participants and stakeholders,” per legal documents.
In the months following the release of the new system, users claimed they were running into problems with withdrawals, death benefits and loans. Ultimately, the complaint alleges that the TSP charges agreed-to fees to efficiently process loan and withdrawal requests, yet users feel that service hasn’t been provided, nor has TSP been transparent or communicable about its ability to do so.
One plaintiff claims that in the three months that it took to receive her hardship withdrawal, she had to take out a separate personal loan with interest.
Another TSP account holder and retired U.S. Army service member said that he requested an out-of-service withdrawal for $12,000. He did not receive it for six months, after which he alleges contacting the Thriftline more than 12 times and receiving a 1099 tax form for his withdrawal even though he had not yet received it.
TSP acknowledged via social media and messages that it was receiving very high call volumes to its help lines during the rollout. Lawmakers have also asked questions of the program’s oversight. According to the Government Accountability Office, which is looking to complete an audit of the program early next year, users continue to report issues.
“[Accenture Federal Services] and Alight completely botched the migration of TSP’s services due to an array of technological and staffing shortfalls that have virtually brought the services offered by TSP to participants to a screeching halt,” the complaint alleges.
The ThriftLine is operated by Accenture, which acknowledged Federal Times’ request for comment but did not immediately respond.
MacKenzie Lucas, a spokesperson for Alight Solutions, did not provide further comment on the complaint, per policy regarding litigation.
“I can share that we have a strong track record for delivering with excellence for our clients and their employees,” she said.
Kim Weaver, a spokesperson for the board, did not provide comment on the filing of the complaint, citing an inability to remark on any potential on-going litigation.
Molly Weisner is a staff reporter for Federal Times where she covers labor, policy and contracting pertaining to the government workforce. She made previous stops at USA Today and McClatchy as a digital producer, and worked at The New York Times as a copy editor. Molly majored in journalism at the University of North Carolina at Chapel Hill.
