Saturday, June 13, 2009

Thrift Savings Plan Upgrades

In typical government fashion, a tobacco bill is carrying changes to the Thrift Savings Plan.

From the article:
• A Roth 401(k) option, which would let participants
put some or all of their after-tax salary into an account that will
grow without tax liability on future earnings.
• Automatic enrollment of new federal civilian employees.

The Federal Retirement Thrift Investment Board said this will encourage
more young employees to start saving for their retirement as soon as
they begin working for the government and take advantage of matching
funds offered by their agencies.

• A survivor benefit that would allow spouses of deceased TSP participants to maintain TSP accounts.

• A mutual fund option that would allow participants to direct their
TSP funds to private-sector mutual funds. The board would be authorized
to select the mutual funds that would be available to plan

It’s far from certain that a mutual fund option will become reality.

I think the first three are definitely good improvements to the program. The fourth one I could care less about. It's noncongruent with the Boglehead philosophy. I'm very pleased with their current low-cost index funds. As long as they keep those, I'll still be happy. The bad thing is that people will bite off on these funds, which I think is a mistake.

The original article from the Federal Times can be found here.

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