For the last several years, new hires have been automatically enrolled in the TSP at a 3% contribution level. When auto-enrollment was introduced, the new hires were automatically invested in the G Fund. Now the default fund is the “age-appropriate” L fund. The reason behind auto enrollment was to get more employees participating in the TSP at an earlier point in their careers – and it worked.
Come April 2020, there will be another change in auto enrollment – the contribution rate will be 5% for those who are auto enrolled from that time forward.
Speaking of auto enrollment, those uniformed service members who opted in to the blended retirement system (BRS) in the 2018 open season were not automatically enrolled at any particular savings rate. They have to elect a contribution rate.
If you’re a uniformed service member who opted in to BRS, but have not yet elected to contribute, you need to do so. BRS will not be as generous as the legacy system in retirement unless you contribute to the Thrift Savings Plan.
TSP investment choices including the following funds:
Government Securities Investment Fund (G Fund), special Treasury issues with an average maturity date of about 14 years;
Common Stock Index Fund (C Fund), which tracks the Standard & Poor’s 500 index of large U.S. stocks;
Fixed Income Index Investment Fund (F Fund), a combination of corporate and government bonds;
Small Capitalization Index Investment Fund (S Fund) tracking the Wilshire 4500;
International Stock Index Investment Fund (I Fund), tracking the Barclays EAFE index; and
Lifecycle Funds (L Funds), in which investors pick from one of the available target withdrawal dates (2020, 2030, 2040 or 2050) or an “income fund” for those already withdrawing their accounts or close to that point.