Holidays Also Mark Open Season for Retirement Investors
By Douglas J. Gillert
American Forces Press Service
WASHINGTON, Nov. 9, 1999 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 Nov. 15 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.
There was talk last year of the plan adding two new investment funds, for international and small-business stocks, but nothing's been done on that so far and just three funds are available to investors.
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.
Program details are contained in Thrift Savings Plan brochures and forms available at civilian personnel offices and at the TSP Web site on the Internet. The next open season runs May 15-July 31, 2000.