August 2, 2010 — Automatic enrollment in the Thrift Savings Plan has officially begun. Any federal employee hired as of August 1, 2010 will be automatically enrolled in the TSP, the federal government’s 401k plan.
Greg Long, executive director of the Federal Retirement Thrift Investment Board and Tom Trabucco, director of external affairs, spoke about the change on today’s For Your Benefit program hosted by Bob Leins and Tammy Flanagan.
All new hires will be enrolled in the TSP’s G Fund at a three percent contribution rate.
“For every new participant we send a welcome letter. And for everyone who is automatically enrolled, it will be a customized welcome letter letting them know the phone numbers, the website address, and some basic material about the TSP and how to use it,” Long says.
New TSP participants unsure of how to manage their funds or what funds they should invest in, are urged to look at the L Funds.
“The message we deliver to our participants is if you don’t have the time, if you don’t feel comfortable making the decisions of which baskets, which funds, you want to put your eggs in, and then on an ongoing basis figure out how many eggs in each basket and how to move that over time, the way we’ve responded to that is to create the Lifecycle Funds, the L Funds. Figure out which year you’re going to need the money and that’s the fund which is most likely appropriate for you,” Long says.
Long reminds investors they can go online to the revamped TSP website, TSP.gov, to manage their funds. While participants must log-in to the site to see their personal TSP accounts, access to the latest return rates and educational materials on the TSP are available to anyone without a log-in.
EDITOR’S NOTE: During the show, the lockbox loan payment feature is discussed. Please note that the lockbox loan payment feature is available to participants who enter non-pay status or those who are activated for military service. It is not available to those who simply separate from federal service with an outstanding loan. Those individuals must repay the outstanding loan balance within 90 days of the date when the TSP is notified of the separation by the employing agency. If payment is not made by that time a taxable distribution will be declared.
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