Pay & Benefits Watch Pay & Benefits WatchPay & Benefits Watch
Key developments in the world of federal employee benefits: health, pay, and much more.

TSP time

The next Thrift Savings Plan open season isn't until May 15, but now's the time to start thinking about your investments. Beginning in May, federal employees under the Federal Employees Retirement System (FERS) can elect to contribute more of their basic pay, up to 11 percent, to their TSP accounts. Employees under the Civil Service Retirement System (CSRS) may contribute up to 6 percent. Changes employees make to their accounts will take effect in July.

Under IRS rules, employees may contribute to TSP accounts up to a limit of $10,500 this year. Government matching contributions do not count toward the limit.

Should you take advantage of the new benefit and contribute more to your plan, or should you consider other savings vehicles, such as individual retirement accounts? Each employee's case is different, but Peter R. Lynn, Chief Executive Officer of Government Retirement and Benefits, Inc., advises his clients to max out their TSP contributions before putting money in other savings accounts.

"It's common sense," Lynn said, since agency matching contributions allow FERS employees to receive a 100 percent rate of return right away. And even though CSRS employees don't get matching contributions to their TSP accounts, the deferral of taxes on TSP investments is enough reason to max out your TSP contributions, he said.

Final Results for 2000

In case you missed it, the year-end numbers for the Thrift Savings Plan's three funds were released in early January. Here's a look at how the funds fared:

C Fund

F Fund

G Fund

Last 12 months (Jan.-Dec. 2000)




This is the first time in five years that the C fund has suffered an annual loss. The fund gained 20.95 percent over the course of 1999. But this year's loss was no surprise, considering that C fund returns were negative for 8 of the 12 months in 2000.

TSP and DoD

The fiscal 2001 Defense authorization bill, H.R. 4205, which became law in early November, allows service members to participate in the TSP. Previously, the plan was only open to civilian federal employees. A similar provision was included in fiscal 2000, but with a catch: The Defense Department could only begin allowing service members to contribute money to the TSP if the department found a way to offset lost tax revenue.

According to a Pentagon spokesperson, that's not the case this time. There is no offsetting legislation, and service members are expected to be enrolled in the TSP by October 2001.

New Records

The new TSP recordkeeping system, which will provide employees with daily valuations of their accounts and allow them to check their TSP balances and transfer money between funds daily, has fallen off schedule by between two and three weeks, the TSP Board announced in December. Each month the board provides an update on the new system, which is now being tested for computer bugs. As of December 15, approximately 9,400 bugs had been discovered, more than the contractor building the new system had predicted. The board has delayed implementation of the new system indefinitely, but will introduce two new funds, the S and I funds, in May using the current system. The S Fund will track the Wilshire 4500 stock index, which covers about 6,500 stocks of small U.S. companies. The I Fund will track the Morgan Stanley EAFE fund of stocks in 20 countries in Europe, Australia and Asia.


An earlier version of this article stated that the new TSP recordkeeping system is expected to be ready by May. That is incorrect; the TSP board has delayed implementation of the new recordkeeping system indefinitely.

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