Tom Trabucco, director of external affairs for the Federal Retirement Thrift Investment Board, said the TSP will send its 4.5 million participants more information on the Roth option in mid-February, along with their annual statements. ()
The board governing the Thrift Savings Plan expects to unveil regulations governing a new Roth option sometime next week.
Tom Trabucco, director of external affairs for the Federal Retirement Thrift Investment Board, said Monday that the regulations will be published in the Federal Register within the next seven to 10 days.
Trabucco said the TSP will send its 4.5 million participants more information on the Roth option in mid-February, along with their annual statements. The board decided last year to save money by not mailing Roth information separately.
The board still expects to launch the Roth option in the second quarter of 2012, as early as April.
Under a Roth option, participants would invest after-tax earnings into TSP funds that will grow without tax liability on future earnings. This differs from the standard TSP plan, where before-tax dollars are invested and taxed when they are withdrawn. The Roth option is expected to primarily benefit military service members and select groups of federal employees, such as judges. Most federal employees are likely to have lower incomes and lower taxes in retirement than they do while working and making contributions, and would not benefit from a Roth investment option.
For more than a year, TSP officials have been working with agencies across the government to make sure they have upgraded their payroll systems to process Roth option contributions.
"They're programming away," said Penny Moran, TSP's director of participant services. "We've had some who have called and said they want to test with us. It's a major effort, but since we already have the process in place for sending in contributions, it's not like this is totally new."
December also saw the second straight monthly decline in the number of Federal Employees Retirement System employees making TSP contributions. More than 2 million FERS employees made contributions that month, but it was 18,000 fewer than in November, and 23,000 fewer than in October.
Meanwhile, the number of FERS employees not contributing to TSP increased from 355,000 in November to 367,000 in December.
Renee Wilder, the board's director of research and strategic planning, said that is likely a sign that retirements continued to accelerate at the end of 2011. She also said some participants may have hit the $16,500 elective deferral limit early and had to stop contributing for the rest of the year.
Also, nearly 6,700 new employees opted out of TSP in December instead of being automatically enrolled, which represented a 6 percent increase over November. Wilder said that may have also contributed to the contribution rate decline.