TSP: Love it or leave it, big changes coming next week


The Federal Thrift Savings Plan, Uncle’s Sam’s in-house 401k, is arguably the best retirement savings-income deal around — period.

There are 5.7 million active and retired participants. They range from current and former U.S. senators to CIA spooks, park rangers, your letter carrier, FBI and Drug Enforcement Administration agents, the folks at the Social Security office and astronauts. While mostly in the modest pay ranges, many have become millionaires the old-fashioned way: Investing for decades through good and especially bad times in the stock indexed C, S and I funds offered to investors, along with a super-safe treasury securities fund not available to the general public, a bond fund, and a series of self-adjusting target date funds that will soon be expanding.

Uncle Sam offers a 5% match to Federal Employees Retirement System workers — the vast majority of people on the federal payroll — and its administrative fees are among the lowest in the business. John Bogle of Vanguard, and the father of the index funds, once told me he wished he could get into the TSP. For decades politicians have pressured the Federal Retirement Thrift Investment Board that runs the TSP to add funds, from real estate trusts to precious metals, dot coms, socially conscious funds and real estate investment trusts which they said couldn’t lose money. Until they did during the Great Recession.

All of the fund-pushers are major campaign contributors anxious to get a piece of the lucrative TSP pie. They would love to have a chunk of the automatic billion-dollar deductions Uncle Sam makes to the different funds each year.

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Yet with all the good stuff about the TSP nearly half of the people who leave government service or retire each year take their TSP money with them. They move it to an outside fund or institution despite all the good things — safety, oversight, government backing — about the TSP. But that may be about to change.

Effective Sept. 15, major changes will take effect in the TSP, changes that will make it more attractive for life-time investors and more convenient for people who need to withdraw different amounts over their retirement. Here are the highlights from recent news story on the changes:

  • The option to take monthly, quarterly and annual installment payments;
  • Ability to take unlimited post-separation, partial withdrawals;
  • Ability to take partial withdrawals and installment payments simultaneously;
  • Option to choose the source of withdrawal payments, including traditional, Roth or both;
  • Up to four age-based in-service withdrawals at age 59-and-a-half or older; and,
  • An end to contribution suspensions if a participant takes a hardship withdrawal.

If you want or need more details,  tune in to our Your Turn radio show this Wednesday, Sept. 11, at 10 a.m. EDT on www.federalnewsnetwork.com or 1500 AM in the Washington, D.C. area. My guests are Mark Keen, certified financial planner and federal benefits expert for National Active and Retired Federal Employees, who will talk about what the changes are and what they will mean to you.

Jessica Klement, NARFE vice president for advocacy, will talk about the long legislative battle to get Congress to approve the historic changes. If you have questions for either of them email them to me before showtime at mcausey@federalnewsnetwork.com.

Nearly Useless Factoid

By Amelia Brust

The snake’s usage as a symbol of medicine and pharmacology is rooted in Greek myth. The Rod of Asclepius —  a staff with snake wrapped around it — represents the Greek god Asclepius, a deity associated with healing and medicinal arts. In his honor, a type of non-venomous snake was often used in healing rituals and crawled around freely on the floor in dormitories where the sick and injured slept. Another such symbol used for centuries is the Bowl of Hygieia, named for the daughter of Asclepius. It’s a chalice with a snake crawling up its stem. Hygieia, Asclepius and Panacea, the goddess of universal remedy, are all mentioned in the original Hippocratic Oath.

Source: Wikipedia

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