TSP Changes Approved, But Will Take Time

Several improvements to the TSP have now passed both the House and Senate and have been sent to the White House for its expected approval of the host bill (HR-1256). The TSP changes however would require some time to take effect even after final enactment. The most closely watched provision, mandating a Roth option in the TSP, could take upwards of two years to implement since it would require substantial changes to the TSP’s operating system and agency payroll systems, plus an educational program. In a Roth option, money goes in after-tax but comes out along with its earnings tax-free, a reversal of the TSP’s current design. Any money going into a Roth account would count against the overall investment dollar limit, currently $16,500, applying to retirement savings programs like the TSP.