TSP Makeover

Change is on the horizon for the Thrift Savings Plan, and representatives of enrollees want to ensure that upgrades to the program are implemented carefully and correctly.

The Federal Retirement Thrift Investment Board on Monday voted to endorse adding a Roth Individual Retirement Account to the TSP offerings. That move would require major changes to the TSP and within agencies, which would have to update their savings forms to process both pre- and post-tax contributions to retirement funds, said Renee Wilder, director of the board's Office of Research and Strategic Planning, at a Wednesday meeting of the Employee Thrift Advisory Council.

Wilder estimated that adding a Roth IRA option would require about $1.5 million in technological upgrades and as much as $5 million for an awareness campaign to educate federal employees about the differences between a Roth fund and the TSP's other offerings.

Surveys of plan participants have indicated that a Roth IRA option would be popular with members of the armed forces in particular. Chuck Witschonke, deputy director for compensation at the Defense Department, echoed that assessment at the meeting.

"This is our really number one issue for things we think would improve the TSP," he said. "But we also understand that this is a big deal. We would much rather see it done right when you're ready, than a rush job because somehow it's needed right away."

The proposal to allow TSP participants to invest in an array of mutual funds by paying a fee, which the board failed to endorse on Monday, met with a more muted reaction from the employee representatives.

Catherine Ball, a legislative representative for the National Treasury Employees Union, said she viewed the proposal as one that employee groups would support only if it was necessary to gain congressional support for legislation (H.R. 1256) that would create the Roth IRA option and automatically enroll new federal employees in the TSP.

Executive Director Greg Long told the employee groups at the meeting that he was unhappy with the language related to the mutual fund window in H.R. 1256, because it might require the TSP to vet any mutual funds that federal employees choose to invest in, imposing an enormous burden on the program's staff.

No matter what language is adopted ultimately, the employee council representatives said they want to ensure that the costs of any mutual fund investment window are paid by those who use it. Wilder said she thought the number of people who would choose to invest in mutual funds through the TSP would be small enough that they would not incur substantial administrative costs. If there is an opportunity to amend H.R. 1256, the board has proposed language to require that mutual fund investors bear the full costs of their investments.

Beyond legislative concerns, NTEU's Ball said she was concerned about the aftermath of a phony TSP e-mail designed by the Justice Department to test their employees' awareness of Internet phishing schemes. Ball said she had heard a number of complaints from union members about the test, and wanted to make sure the TSP had "scared off other agencies" from attempting similar practices.

Long credited news reporting for helping convey the truth about the bogus e-mail, and said the public response to the Justice test likely would dissuade other agencies from designing their own such training exercises.

"The bottom line is, there are people who post crazy things on the Internet, and there's nothing we can do about it," Long said. "The best we can do is become aware of it, post things to our Web site and make sure our phone teams are aware of it, make our communications team aware of it."