TSP Proposal Seeks to Overcome Inertia

The TSP says that many employees apparently simply never get around to making personal investments—missing out on government matching contributions as well as tax-advantaged account growth—and many simply leave their investment money in the current default fund, the G fund, even though that might not be the appropriate fund for them. Agency automatic and matching contributions still would not begin until after a waiting period. However, a TSP official noted at a House federal workforce subcommittee hearing that the change could have "potentially significant" costs—the direct additional cost to agencies from making more matching contributions, and a cost in lost tax revenue because the employee contributions would be from pre-tax money. The tax expenditure aspect might bring the proposal under the sway of the Ways and Means Committee, complicating prospects for passage.