Published: Feb 24, 2025

 

Navigating Financial Uncertainty: What Federal Employees Need to Know About the Impact of D.O.G.E.

For Federal Employees, the potential impact of D.O.G.E. has raised many questions about employment stability, retirement savings, and financial security. Whether you are facing a transition to a new role, considering early retirement, or evaluating ways to manage living expenses, it's important to understand your options.

At Hall Financial Advisors, we work with Federal Employees to navigate financial challenges with clarity and confidence. Below, we address some of the most common concerns we’ve been hearing—and how we can help:

1. What Happens to my TSP or  401(k) If My Employment Status Changes?

If your employment status shifts due to D.O.G.E., you have several options for your retirement savings:

• Leave it in your current plan – Your funds can typically remain in your TSP or 401(k), though investment options may be limited.
• Roll it over to an IRA – This option can provide greater investment flexibility and personalized financial management.
• Move it to a new employer’s plan – If you transition to a new federal or private-sector job with a 401(k), you may have the option to consolidate accounts.
• Withdraw funds (with caution) – Depending on your age and circumstances, withdrawing funds could trigger taxes and penalties, so it's crucial to explore alternatives first.

Our team can help you evaluate the best course of action based on your financial goals and current situation.

 

2. What If I Need to Access My Retirement Savings Unexpectedly?

If a sudden change in employment forces you to rely on your savings, you may have options, including:

• TSP Hardship Withdrawals – If you meet eligibility criteria, you may be able to take a withdrawal due to financial hardship.
• Penalty-Free Access (If Over Age 59½) – If you’ve reached this milestone, you can access funds without early withdrawal penalties.
• Substantially Equal Periodic Payments (SEPP) – This IRS-approved method allows penalty-free withdrawals before retirement age under specific conditions.

Before making a withdrawal, it’s essential to understand tax implications and long-term effects on your retirement strategy. We can guide you through the pros and cons of each approach.

 

3.How Can I Adjust My Financial Plan If My Income Changes?

A shift in income can affect everything from day-to-day budgeting to long-term retirement goals. Steps to consider include:

• Reviewing Your Emergency Fund – Having 3–6 months of living expenses set aside can provide a crucial financial buffer.
• Adjusting Your Investment Strategy – Depending on your employment outlook, you may need to modify your risk exposure or reallocate assets.
• Exploring Alternative Income Options – If job transition is in your future, reviewing new employer benefits and retirement savings opportunities is key.

We can help assess your current financial plan and make adjustments that keep you on track—even in times of uncertainty.

4. How Can I Prepare for Future Financial Uncertainty?

Even if your employment status remains unchanged, it’s wise to plan for potential shifts. Consider:

• Reassessing Your Retirement Timeline – Would a change in employment affect your ideal retirement age?
• Maximizing Employer Contributions While You Can – If you’re still employed, ensuring you maximize employer-matching contributions can boost long-term savings.
• Diversifying Income Streams – If applicable, additional savings vehicles or investments can provide extra financial security.

Thinking ahead now can help you feel more in control of your financial future. Our team is here to help you create a proactive strategy.

 

The Bottom Line… We’re Here to Help

While employment transitions can be stressful, they don’t have to derail your financial goals. Whether you need guidance on managing retirement savings, rolling over your 401(k), or adjusting your investment strategy, Hall Financial Advisors is here to provide clarity and support. Reach out today and schedule a no-obligation consultation with one of our trusted advisors.

729674