Participation in the Thrift Savings Plan is higher than ever before.
Tom Trabucco is Director of External Affairs for the Federal Retirement Thrift Investment Board and talked more about recent TSP changes on the Daily Debrief.
He said that, since President Obama signed legislation in June, more people have wanted to invest.
“Our first push was to get the immediate employer contributions going because that was something that gets money in participants’ pockets right away. So, we worked closely with the employing agencies who did a fantastic job and it looks like, although we required them to have it done by the beginning of the first pay period in August, it looks like virtually everyone got it done before that.”
Trabucco said the numbers showed an increase of 100,000 accounts between the end of May and the end of July.
“Most of that is attributable to the immediate employer contributions, which of course started up accounts for . . . probably 80,000 people who did not have accounts before. It’s a terrific thing and all of those folks who have the accounts automatically started up for them will be getting a letter advising them that if they put in their own money now as a FERS employee, they’ll begin picking up matching contributions, as well.”
The increased participation benefits those who are already participating, as well.
Trabucco said more participation means the costs can be spread over a larger group, which means reduced costs.
“It’s one of our secrets. We are so big, we can spread those costs over a large number of people. The other secret is, we’re cheap and we just don’t spend much participant money.”
Another change to the TSP has to do with the automatic enrollment of new federal hires, which will begin soon, as well.
Trabucco said this and other projects were the topic of the monthly meeting held on Monday.
“We [laid] out the things we’re already doing. First of all, maintaining excellence in daily operations, financial accountability, continuing to develop a robust and secure infrastructure. Some of the new things we want to add on to that, such as the revised Web site, e-messaging and the launch of the 2050 fund, which we’ll be doing next year.”
This, he added, is in addition to the five new benefits of that legislation signed in June.
“The immediate agency contributions, which we’ve already begun; the automatic enrollment will begin in the spring of 2010. We’re going to have new spouse beneficiary accounts — these are for the spouses of participants who die while still having an account. Previously the beneficiaries had to take their money out of the TSP and open up an IRA. Now, if you’re a spouse beneficiary, you’ll be allowed to keep your money in the TSP. We’ll have that up by early 2010. Roth accounts, which we’ve said before is the long pole in the tent — it is a big project. . . . It’ll take us two years to complete that.”
In addition, Trabucco added that a mutual fund window is also in store, though there is no firm date for the implementation of such a feature as of yet.
Those who have money in the 2010 L fund should be prepared for their money to roll into the Income fund.
“Then, we’ll start our 2050 fund off into the future. That will begin in January, 2011. . . . We just keep rolling [the funds] on as the decades pass.”
Trabucco concluded that the beta testing of the TSP’s new site is also something to look forward to.