An open season for the Thrift Savings Plan begins this week, allowing federal employees to enroll in the investment program or move around the contributions they make to its three funds.
From Nov. 15 until Jan. 31, federal employees can make changes to their TSP contributions. Changes made in November or December will take effect the first pay period of 1998. Changes made in January will go into effect the first day of the following pay period after the changes are made.
Under the TSP, federal employees can invest money in three funds: a stock index fund (C Fund), a securities fund (G Fund) and a bond fund (F Fund). The Federal Retirement Thrift Investment Board, which manages the TSP, plans to add two new funds in 2000: a small capitalization index fund and an international index fund.
Some investors were concerned during the recent stock market scare about the C Fund, after it dropped 3.38 percent in October. But over the past year the C Fund has gained 31.94 percent. Still, anxious investors may focus more of their investments in the safer G or F Funds, despite experts' suggestions that over the long haul, the C Fund is the place to be.
For employees covered by the Federal Employees Retirement System, agencies automatically contribute the equivalent of 1 percent of employees' pay to the TSP. Agencies also provide matching funds on the first 5 percent of pay employees contribute each pay period.
The maximum contribution allowed for employees under FERS is 10 percent of pay. The maximum is capped at $10,000 in 1998, up from $9,500 this year. Employees under the Civil Service Retirement System may contribute up to 5 percent of their pay, but do not receive agency matching contributions.
Employees hired before July 1, 1997, are eligible to enroll during the open season. Employees hired on or after July 1 must wait until the next open season, in May 1998.
Information on the TSP open season is available in agency personnel offices and from GovExec.com's TSP Guide.
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