TSP open season begins

TSP open season begins

Federal employees can begin their holiday gift giving early with a gift to themselves in the form of Thrift Savings Plan investments.

Open season for the government's retirement savings and investment plan begins today and continues through Jan. 31, 2000. During this period, civilian employees with at least six months' continuous federal service may enroll in the TSP. Current participants can change their future contributions or the way they are invested.

The plan offers three investment funds. The G Fund invests in short-term U.S. Treasury securities specifically issued to the Thrift Savings Plan. Investments earn fixed interest at a rate equal to average market securities with four or more years of maturity. The U.S. government-backed securities guarantee G Fund investments and earnings against loss.

The F Fund invests in public-sector and commercial notes, bonds and other obligations and offers potentially higher returns than G Fund securities. The C Fund diversifies investments in the stock market and is the riskiest fund, but potentially the highest yielding one. Neither contributions nor earnings in these two funds are guaranteed or insured against loss.

Each of the funds has had varying degrees of success during the past 12 months. A healthy stock market has kept the C Fund atop the performance charts, yielding a 25.56 percent investment growth for the past 12 months ending Oct. 31. During the same period, the F Fund posted a .47 percent gain and G Fund investments grew by 5.78 percent.

All contributions to the plan are made through payroll deductions. The amount employees can invest depends on their employment status. Civil Service Retirement System employees may contribute up to the lesser of 5 percent of their basic pay or $10,500 in 2000. Federal Employee Retirement System employees may contribute up to 10 percent of their basic pay or $10,500 in 2000, and their agencies match the first 5 percent they invest.

The Thrift Savings Plan also allows participants to apply for low-interest loans, based on the current G Fund rate of return, including loans to purchase homes.

Over the past year (October 1998 to October 1999), the C Fund is up 25.56 percent, the F Fund 0.47 percent and the G Fund 5.78 percent.

The TSP is slated to add two new funds next year. 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.

The next open season runs May 15-July 31, 2000.

For a daily index of the performance of the C Fund, see the "TSP Ticker" on the front page of GovExec.com. For more TSP information, see the Thrift Savings Plan guide.