TOPICS
TOPICS
Want a Loan? Pay Up
Gary Amelio, executive director of the Federal Retirement Thrift Investment Board, has formally proposed charging Thrift Savings Plan members a $50 fee when they borrow money from their retirement plans.
The proposal was unveiled Wednesday in the Federal Register. TSP investors have until May 7 to submit comments on it.
During a March 24 meeting of the Employee Thrift Advisory Council, Amelio said the fee was necessary because each loan costs about $48 to process. Only 20 percent of TSP participants have loans, he said, and the remaining 80 percent have subsidized those borrowers. The ETAC members were generally accepting of the move.
"The loan program ... encourages participants to contribute more to the TSP because they know they will have access to some of the money in their accounts to help purchase a home or pay unexpected bills," the proposed rule said. "However, the TSP is not a checking or savings account; it is a long-term investment intended for retirement. Removing money from a TSP account -- even when it is paid back -- may diminish the amount available to the participant for retirement."
Investors took out about 300,000 loans from the Thrift Savings Plan in 2003, according to the Thrift board. That was approximately double the number of loans taken out in 2002, TSP officials said. Amelio acknowledged that the new fee could discourage members from applying for loans.
"To be honest, we are hoping it does," he said.
The Thrift board proposal also would require borrowers to have only one general purpose loan out at one time, and would put in place a 60-day waiting period after a loan is repaid and a new loan can be taken out.
If a TSP participant has two loans, according to the proposed rule, the second would have to be a residential loan -- which could be used for a down payment on a house. The waiting period, Amelio said, was to avoid potential complications when a new loan request arrived at the processing center before a final payment.
Comments can be faxed to 202-942-1676 or mailed to:
- Patrick J. Forrest
Federal Retirement Thrift Investment Board
1250 H Street, N.W.
Washington, D.C. 20005
COMMENTS
- After reading the comments of other participants, I am obliged to comment. You should leave things as they are. Listen to the people. In the “Want a Loan? Pay Up” letter, it states that ETAC members are generally accepting of the move. Take another look at the comments, and leave it alone. Larry W. La Favor Posted April 23, 2004 9:37 AM
- Dear Mr. Amelio: If it costs $48 to process a loan then you're even more stupid than it appears. Anyone notice what it's like to get daily balances the last week? Something is not right here. I am sick and tired of the system telling me what to do with MY money, I am trying to save for my retirement; all the system wants to do is take all the money that WE earn, I am sick and tired of it!!!!! NO! I do not agree with this, I would not be in TSP if my job was not matching the payments. When I borrow, which is not often, I continue to make my regular payments plus pay the amount of the loan. This gives me pleasure of paying myself back versus paying some crooked bank. I am capable of making my own decisons, I do not need some bureaucrat making them for me. I wish that I could get into the CSRS system then I would not have to be bothered with the thrift savings. Why is it that the government goes in and borrows MY money? Did you charge them $50.00? Too many of YOU have your hands in my business. GET OUT!!! Leave my retirement money alone. NO I DO NOT AGREE... I think Mr. A needs to resign and get someone who cares about our interests. All rights reserved Carol GovExec.com reader Posted April 22, 2004 8:43 AM
- You go on the Web Site. (www.tsp.gov) Punch in your information. Request a loan and agree to pay it back. All done within 5 minutes. This costs $48.00 ?!!!! Come on, Amelio. If you don't want participants to get TSP Loans, why was it made so easy for participants to get TSP loans?? GovExec.com reader Posted April 13, 2004 3:15 PM
