TSP Continues to Weigh Changes

The TSP is continuing to consider several potential changes to the program, most significantly the prospect of adding a “Roth” option in which investors would put in after-tax money, but withdrawals of that money and its associated earnings would be tax-free. Currently, the TSP accepts only pre-tax money, and on withdrawal that money and the associated earnings are taxable. However, any money designated for such accounts would count against the dollar limit (this year, $15,500) that applies to investments in the TSP and similar private sector savings plans. Other plans have begun offering such options more widely in the last several years, but the TSP would need to get legislation approved in order to make that change. The TSP governing board likely will formally consider such a proposal in the upcoming months. Meanwhile, the board has approved a plan to send out an annual statement at the start of each year, starting in 2008, in addition to the quarterly statements it now makes available. The annual statement will be mailed, in part to help the TSP learn if it has current addresses for participants.