Thanks to the rebounding stock market, the number of federal government workers with Thrift Savings Plan accounts worth $1 MILLION DOLLARS or more has jumped from 77 in March 2008 to a total of 136 with at least a million dollars in their optional 401k plans as of this month. Their average account balance is $1.2 million and the highest is $3,883,615.20.
Lest this be used as ammunition by professional bureaucrat bashers, be advised that most if not all of the million dollar accounts were transferred into the government TSP by people who made their big bucks in the private sector. Many, if not most, were highly-paid lawyers, doctors, or political appointees who came into government.
The Thrift Savings Plan is the government’s version of a 401k plan. Most federal and postal workers participate in the TSP and the vast majority (those under the Federal Employees Retirement System) are eligible for matching contributions of up to five percent if they invest at least five percent.
As of November, the TSP was worth $271 billion and has 4.4 million account holders. That includes both active and retired federal and military personnel plus former feds who left their money in the plan.
Around 43 percent of all the money in the TSP is in the super-safe G-fund. It is made up of special U.S. Treasury securities whose interest rate is set monthly.
About 24 percent of investments are in the C-fund, 8 percent in the S fund, 7 percent in the I-fund and 7 percent in the bond-indexed F fund. About 13 percent of all investments are in the target-date L funds.
Feds who transferred large amounts of money into the TSP weren’t the only winners in 2010.
For the 12-month period ending in December, the G-fund (treasury securities) was up 2.81 percent, the F-fund (bonds) was up 6.71 percent, the C-fund (large cap) was up 15.06 percent, the I-fund (international stocks) returned 7.94 percent and the small-cap S-fund was up an eye-popping 29.06 percent. That means that feds who kept money (and continued to invest in) those accounts during the 2007-2008 market crash have seen their accounts rebound dramatically.
To put that in perspective, Tom Trabucco, director of external affairs for the TSP told Federal News Radio’s Chris Dorobek that while the I-fund was up 7.94 percent in 2010 and up 35 percent in 2009, it had a negative return of 38.32 percent in 2008. That dramatic drop in stock market values prompted many federal investors to pull money out of the C, S and I funds and park it in the super-safe G-fund.
Trabucco was my guest yesterday on our Your Turn radio show. He answered a lot of questions from listeners and readers who are counting on the TSP to provide anywhere from 1/3 to 1/2 of the money they have to spend in retirement. Listen to the show by clicking the link above. And tell a friend!
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TSP options could expand in 2011 What changes are on the way for your Thrift Savings Plan? The Federal Retirement Thrift Investment Board’s Tom Trabucco gives a preview to Federal News Radio’s Mike Causey.