President Barack Obama today signed the Family Smoking Prevention and Tobacco Control Act, which contains several major overhauls to the government’s Thrift Savings Plan retirement program. The TSP overhaul will:
- Create a Roth option, which will allow TSP participants to pay taxes on money they invest in the program and make tax-free withdrawals in retirement years later. The Roth option is expected to mostly benefit military service members.
- Automatically enroll all new civilian federal employees in the TSP’s G Fund. Military service members will not be automatically enrolled.
- Allow new enrollees to receive automatic matching contributions from their agency right away, instead of the six months to one year waiting period now in effect. This will be in place by Aug. 1, the board said.
- Allow the board governing TSP to create a mutual fund option if it chooses.
- Allow spouses to maintain the TSP accounts of deceased participants. Spouses are now required to withdraw money within 60 days of a participant’s death and reinvest it in another retirement account.