A Senate amendment further would mirror several TSP-related provisions
that earlier passed the House. It would require the TSP to offer a Roth
option, in which money goes in after-tax but comes out along with its
earnings tax-free, a reversal of the current structure in which money
goes in pre-tax but comes out along with its earnings taxable. The measure
also would require that newly hired employees contribute their own money
to the program at a rate between 2 and 5 percent, presumably 3 percent,
unless they opt out, and would give the TSP the option to create additional
investment funds without the need for further legislation. Such funds would
have to be "low-cost, passively managed indexed funds that offer
diversification benefits." In addition, the TSP would have the option of
creating an investment "window" through which participants could invest
in outside mutual funds, although at an additional cost.
