Obama Looks to TSP to Create New Retirement Savings Plan for Americans

Barack Obama announced the plan Tuesday during the State of the Union. Barack Obama announced the plan Tuesday during the State of the Union. Larry Downing/AP

President Obama unveiled a proposal in his State of the Union Address this week that would give many working Americans access to an offering within the Thrift Savings Plan, currently available only to federal employees.

Obama announced his plan to create by executive order a program called myRA, which would enable workers in households earning less than $191,000 annually to enroll in an Individual Retirement Account, or IRA. The plan will give private-sector workers the “same security investment return available to federal employees,” according to the White House, by earning the same variable interest rate as the TSP’s G Fund.

“It’s the same structure as the G Fund in the Thrift Savings Plan, so it’s the average of yields that are above four years,” said Treasury Secretary Jack Lew Wednesday. “And it’s something that we’re very familiar with because most federal employees have a [TSP] and it’s really the same mechanism.”

Obama said the plan would offer a safe way for citizens who do not have access to an employer-sponsored retirement account to develop a nest egg.

“These account balances will never go down in value,” Obama said at an event Wednesday to promote the program. “They’re backed by the full faith and credit of the United States government. And it’s affordable.”

Workers can contribute through paycheck deductions and can withdraw from the account in an emergency, both options currently provided to federal employees. The G Fund is the TSP’s safest and most popular offering, with 37 percent of the plan’s current assets invested in the Treasury bonds.

All federal employees automatically are enrolled in the TSP with the G Fund serving as the default fund. Feds can opt out of the plan at any time. Obama will suggest the same system for working Americans without an existing account in his forthcoming fiscal 2015 budget proposal, the White House said. 

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by G Suite

    Cross-Agency Teamwork, Anytime and Anywhere

    Dan McCrae, director of IT service delivery division, National Oceanic and Atmospheric Administration (NOAA)

    Download
  • Data-Centric Security vs. Database-Level Security

    Database-level encryption had its origins in the 1990s and early 2000s in response to very basic risks which largely revolved around the theft of servers, backup tapes and other physical-layer assets. As noted in Verizon’s 2014, Data Breach Investigations Report (DBIR)1, threats today are far more advanced and dangerous.

    Download
  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

    Download
  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

    Download
  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

    Download
  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

    Download
  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

    Download

When you download a report, your information may be shared with the underwriters of that document.