New Investment Options Possible

In addition, the measure authorizes creation of a Roth option in the program, in which money goes in after-tax but comes out with its associated earnings tax-free. That is a reversal of the current design, in which money goes in pre-tax but comes out along with its earnings as a taxable distribution. The TSP has been cool toward that idea and has said that setting up such an arrangement would be a lengthy process. The bill also would allow the TSP to add, at its discretion, "self-directed investment options" which would allow participants to invest in funds other than those offered directly by the TSP, with the TSP acting as a conduit. The presumption is that such funds also would be index funds with relatively low overhead costs such as the TSP currently offers, but other types would be allowable should the TSP consider them appropriate; TSP officials lean heavily toward offering only index funds.