The Thrift Savings Plan’s new Roth option has drawn a tepid response in its first two weeks of existence, with only four participants making payments so far.
But the Federal Retirement Thrift Investment Board, which governs TSP, said the small number of contributions was expected because of the government’s payroll schedule, and it expects those numbers to accelerate in the coming weeks. FRTIB External Affairs Director Kim Weaver said many more contributions should come in after Memorial Day.
The board said it experienced no major problems as the Roth option went live May 7. The board said it found four minor post-deployment problems, three of which have already been fixed.
“We were very concerned that we would turn this on and somewhere, something would roll into another system and cause bad things to happen,” said Roth project manager Karen Vaughn. The four problems “weren’t showstoppers,” but required some recoding.
The board said the Roth’s launch was an extremely complex and sprawling effort, that involved more than half of the board’s staff and more than 140 contractors to make the required information technology and process changes.
“Roth is a big deal,” FRTIB Executive Director Greg Long said. “This was not easy. This required us, internally, to do things differently.”
The first four Roth contributions came in May 15, Vaughn said. Three participants also rolled money into Roth on May 18, she said.
The Roth option allows participants to invest after-tax earnings into 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 This differs from the standard TSP plan, where before-tax dollars are invested and taxed when they are withdrawn.
Military service members and certain federal employees, such as judges, who are likely to have lower taxes while they work, will see the most benefit by choosing the Roth option. Most federal civilians would probably be better served by staying with the standard TSP plan.
But service members will have to wait for it — perhaps until the fall — because the Defense Finance and Accounting Service is still adapting its systems. DFAS expects to roll out the Roth option to Marine Corps members in June, roughly 1.1 million civilian employees at Defense and other DFAS customer agencies in July, and Army, Navy and Air Force service members in October.