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Latest on fed benefits, including changes for TSP
Wednesday - 6/9/2010, 6:43pm EDT
Trabucco said they're gearing up for automatic enrollment, which will start in August.
"When a new employee comes on . . . they will automatically be signed up for the TSP at a 3 percent contribution rate. [That] has been chosen because that's what generates the dollar-for-dollar match under the FERS matching arrangement. I should say this does not apply to uniformed services, and, of course, we have no new employees coming on as CSRS, so this is just the FERS folks. They'll be signed up for the 3 percent. That will come out of their paycheck. They'll pick up 3 percent matching from their employing agency, as well as 1 percent agency automatic. Their funds will be invested in the G fund. What this does is make inertia work in favor of participating in the TSP. So, to the extent that people aren't really going to make a decision, this makes the decision in favor of contributing."
If an employee wants to opt out, he or she has 90 days to ask for the money back. Trabucco explained that this will be a big undertaking for both the Board and agencies themselves.
He said the TSP is also working on another big project -- finalizing the program for spouse beneficiaries.
"This is a change that I'm very pleased with personally. It was suggested by members of our Employee Thrift Advisory Council . . . [and] allows spouses to inherit the TSP account of an individual who dies. Up until now, when a TSP participant dies, the participant designates the beneficiary. If there's no beneficiary designation, it is the surviving spouse in what's called the Order of Precedence that applied to all retirement benefits in the federal government. Those folks received the account balance . . . or it was sent to their designated financial institution in order to . . . maintain their pre-tax status. This legislation, once it was enacted last year, put in place an interim plan that allowed those surviving spouses to simply leave their funds on account and invested in the G fund so that they couldn't lose any money . . . And keep them there until we put in place a spouse beneficiary program. That will be going into place by the end of this year, and once that is in place, those surviving spouse beneficiaries will be able to manage their accounts, as well, and invest in all of the TSP [accounts]."
Other topics discussed during the program include additional pay and benefits legislation and information. Click on the audio link at the top of the page to hear the whole show.
Learn all about how you can get specific TSP questions answered by going to the DorobekInsider blog.
Find all the latest news about your Thrift Savings Plan (TSP) in one place, including our weekly interviews with the TSP's Tom Trabucco and our TSP Snapshot, a monthly analysis of the state of the TSP. Be sure to check back daily to see how your TSP funds closed via our Thrift Savings Plan Ticker. Bookmark the page or add our RSS feed to your reader.