By August, newly hired employees who enroll in the Thrift Savings Plan will immediately be eligible for matching contributions from their agencies, the board governing TSP said Tuesday.

Federal employees now can enroll and invest their own money in TSP on their first day on the job, but they cannot receive matching funds and an additional automatic 1 percent contribution from their agencies until they've been employed for six months to one year. Military service members do not receive matching contributions, so this provision will not benefit them.

The Federal Retirement Thrift Investment Board said immediate contributions will be the first major change to TSP following Congress' passage of the tobacco bill last week, which contained four other changes to TSP. President Barack Obama is expected to sign the bill this week.

"This is a major victory for TSP participants, and one in which we're moving very quickly to modify the regulations," said Gregory Long, the board's executive director.

Tom Trabucco, the board's external affairs director, said the board will notify agencies within the next few days that they must provide immediate contributions by August, though he hopes agencies will be able to do it earlier.

Other changes authorized by the new legislation will then be addressed in the following order:

• Automatic enrollment of new federal civilian employees in the G Fund. New military service members will not be automatically enrolled.

Penny Moran, director of the board's Office of Participant Services, said this provision requires the board and federal agencies to adopt complicated system changes. She did not say how soon the board hopes to establish automatic enrollment.

• A survivor benefit allowing spouses of deceased TSP participants to maintain TSP accounts.

Spouses are now required to withdraw TSP money within 60 days of the participant's death and reinvest it in another retirement account.

• A Roth 401(k) option, which would let participants put some or all of their after-tax salary into an account that will grow without tax liability on future earnings. A Roth option is expected to benefit military service members particularly, because they could make contributions during their military careers, when their salaries — and taxes — are lower, then withdraw them tax-free during retirement, when they are more likely to fall in higher tax brackets.

Adding this option will probably take about two years, the board has said. "We'd hope to do it sooner rather than later, but the priority is that these multiple projects get done and get done accurately," Long said Tuesday.

• A mutual fund option that would allow participants to direct their TSP funds to private-sector mutual funds will likely come last, or not at all.

While the bill authorizes the board to establish this option, it allows the board to choose not to. Long said the board will not move forward on a mutual fund until it and the Employee Thrift Advisory Council study it closely and decide that a mutual fund option will benefit employees.

"This is something we're going to have to talk about," board chairman Andrew Saul said.

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