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Late-arriving feds converting 401(k)s

By Mike Causey
May 6, 2008

Despite — or maybe because of — the stock market's ups and downs, thousands of federal workers are rolling millions of dollars into the Thrift Savings Plan. The money comes from tax-deferred retirement with private firms the feds had built up before they became feds.

During the first quarter, there were 5,887 transactions that rolled $104 million into the TSP, which is the government's version of a 401(k) plan. The TSP has 3.9 million account holders, ranging from senators and scientists to postal clerks, FBI agents and officers and enlisted personnel in the military.

Federal and military investors in the TSP first got the chance to roll outside tax-deferred money into their government accounts in July 2001.

Because the average age of new federal hires is 32, many of them have retirement accounts, or 401(k) plans from previous jobs.

At first, the roll-in pace was slow, but as people learned more about it, the money started flowing in.

From mid-2001 until the end of last month, there have been 96,000-plus transactions worth $2.2 billion.

The TSP says the "average" amount feds rolled into the TSP — taken by dividing the number of transactions by the dollar amount — is $22,487.31. But averages can be deceptive.

More than a dozen "new" feds — likely, successful lawyers-turned-federal judges — rolled in accounts each worth more than $1 million.

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