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New TSP choices
Friday - 3/13/2009, 4:30pm EDT
Federal employees who invest in the Thrift Savings Plan, the 401K for federal workers, might have something new to look forward to in the future. Leaders at the TSP are considering some new investment options for feds.
Q:What sort of new option are they considering?
A: It wouldn't be a new fund choice, per se. It would allow investors to take part of their contributions and invest outside the TSP...into a mutual fund. The TSP currently has just over 4 million account holders and at the end of February was worth about $191.5 billion dollars.
Q:What's the risk?
A: The Federal Retirement Thrift Investment Board is studying the pros and cons; the money that investors would use is "tax-deferred" - so if you, the investor, think you know what the next big stock is...precious metal, health care, energy, whatever... you would be allowed to invest some of your balance there. But investors need to know that these funds also charge much larger fees...and you'd have to pay them all yourself.
Q:Why are they considering this?
A: There are many feds who want more tax-deferred investment options. In the past they have asked the board to offer a gold fund, a fund that tracks the NASDAQ index, and a real-estate fund. Those options were all rejected. And there are still some issues to work out... they still have to figure out how much of a fraction of their investment they'll allow to be moved outside the TSP.
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