Big Changes on Hand for Employee Thrift Plan
By Douglas J. Gillert
American Forces Press Service
WASHINGTON, Dec. 9, 1999 More investment funds to choose from and daily transaction processing are among the major changes coming May 1, 2000, to the federal employees' Thrift Savings Plan.
The Federal Retirement Thrift Investment Board that manages the government's 401(k) for civilian employees will transfer all existing accounts to a new system in April. The system will convert dollar amounts to shares and offer investors two new investment options in addition to the three existing funds.
The new International Stock Index Investment I Fund will be invested in the Barclays Europe, Australasia and Far East stock index. The index consists of stocks of companies in 20 countries representing 45 percent of the value of the world stock markets.
The Small Capitalization Stock Index International S Fund will be invested in a Wilshire 4500 index fund. The index represents approximately 23 percent of the market value of the U.S. stock market. It consists of stock actively traded in American stock markets except those in the Standard and Poor's 500 index.
The I Fund is expected to be the most volatile of TSP's five in the short run, followed by the S Fund. Third is the current C Fund, a Barclays Equity Index Fund that tracks the S&P 500. The C, I and S funds potentially can yield higher returns than the safer but generally lower yielding F bond fund and G government securities fund.
Currently, changes investors make to their accounts take effect the following month. Under the new system, transactions will be processed each business day, giving investors more flexibility in managing their accounts. They also won't have to wait for a semiannual open season to change the amount deducted from their pay for Thrift Savings Plan investment. Instead, they will be able to allocate future contributions at any time using the ThriftLine [(504) 255-8777] or the World Wide Web (www.tsp.gov/) or by submitting a Form TSP-50 directly to their Thrift Savings Plan record keeper.
Open seasons will still occur for new enrollments, but the dates will change. The new periods will be April 15-June 30 and Sept. 30-Dec. 31. Currently they are May 15-July 31 and Nov. 15-Jan. 31. Enrollees will receive quarterly rather than biannual statements for the periods ending March 31, June 30, Sept. 30 and Dec. 31.
Loan and withdrawal transactions also will change. Quarterly statements will include loan balance information. Employees with unpaid loans will be able to reamortize them more than once and repay part of the loan ahead of schedule at any time, rather than just once and for the full amount.
Included among new withdrawal options: Employees can make a one- time partial withdrawal if they haven't taken an age-based, in- service withdrawal. They can use any combination of single payments, monthly payments or a life annuity to withdraw the total account balance.
All key transactions will be available on the Thrift Savings Plan Web site. There, employees will be able to allocate future contributions, check a loan status, obtain a loan prepayment amount and begin or, where spousal approval isn't required, complete loan and withdrawal requests and reamortize loans.
More information about the changes was published in the November 1999 issues of Highlights, mailed to current Thrift Savings Plan account holders and also is available on the Thrift Savings Plan home page (www.tsp.gov/).