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TSP funds not enjoying springtime in Europe
Tuesday - 5/22/2012, 8:48pm EDT
Six of the eight Thrift Savings Plan funds are down over the last month as global economic problems reverberate into the government's retirement accounts.
The I fund is likely to take the biggest hit in May as it's already down by $1.63 over the last month.
"You read the papers now and given the things going in Spain, Greece and the overall eurozone, that is obviously creating quite a churn in the market," said Kim Weaver, the director of External Affairs for the Federal Retirement Thrift Investment Board (FRTIB), in an interview with Federal News Radio.
Along with the I fund, three other investment accounts are down by more than a dollar since May 1: the S fund is down $1.60; the L2040 fund is down by $1.04; and the C fund is down $1.09.
Only two funds are above their May 1 price. The G fund is up $0.01 and the F fund increased $0.09.
"Through March the funds have been positive, but (in) April things were starting to get rockier," Weaver said.
Weaver said the overall amount of money invested in the TSP has stayed steady for the past two months at $312 billion. She said it's been steady not because current or former federal employees — about 4.5 million — have stopped investing, but because the market hasn't increased since March.
Roth TSP faces slow rollout
Weaver said the TSP Roth option also has been slow to take off.
The FRTIB rolled it out in early May and so far four employees made their first elections into the Roth TSP, and three employees rolled money from a Roth 401k into the Roth TSP.
"We are very pleased. When we rolled Roth out, we didn't break anything else," she said. "That was obviously something we were very worried about. This was a two-year project that consumed over 50 percent of our agency staff in getting it done. And we are open for business."
Part of the reason for the slow rollout is the federal employee payroll schedule.
"We expect, based on the payroll schedule, we will see more Roth money coming in next week," she said. "That will give us an even higher comfort level that everything is working as it should."
Weaver said employees should consider how the Roth option fits into their needs before investing.
"We don't anticipate this will be very widely used by federal employees," she said. "But it is something that is for certain populations a very good choice. It's something they need to really think about."
The FRTIB also is following legislative changes, including Sen. Daniel Akaka's (D-Hawaii) bill to automatically increase employees contribution to the TSP by 1 percent a year for two years to hit the 5 percent match from the government.
Weaver said the board also is watching two House bills approved by the Oversight and Government Reform Committee. One of the bills includes a provision for phased retirement, and a recent amendment would let employees roll over their annual leave payment to the TSP. Another bill would clarify the thrift plan, like every other 401(k), could be subject to levy by the IRS.
"That has been a subject of contention between us and the IRS for some time, and Congress is clarifying that we would be treated like any other 401(k)," she said.