- The Washington Times - Tuesday, November 14, 2006

Do you realize that nearly 300,000 federal workers refuse a 4 percent tax-deferred pay raise annually?

The feds — mostly in their 20s and 30s — failed to enroll in the government’s 401(k), the Thrift Savings Plan.

Participants in the Federal Employees Retirement System who invest at least 5 percent of pay qualify for a 4 percent tax-deferred match from the government, plus the automatic 1 percent match they get whether they sign up and invest or not.

The 265,000 non-investors are doing two things wrong:

• They are rejecting what amounts to a guaranteed 100 percent first-year return on an investment.

• They are losing a career lifetime of investing the maximum, and getting a total match of up to 5 percent from their employer, by doing nothing.

Between July and September, the value of the TSP grew from $186 billion to $194 billion. That includes increased contributions but also the big jump in the stock market during that period.

Investors have $70 billion each in the S&P; 500 stock indexed C Fund and another $70 billion in the safe G Fund, which is made up of guaranteed U.S. Treasury securities not available to the general public.

The C Fund represents the 500 largest publicly traded U.S. companies. The S Fund, with $14 billion in TSP investments, represents most of the rest of the U.S. stock market. The indexed I Fund, invested in 21 nations, has $16 billion. The F Fund, which tracks the bond market, has $10 billion in TSP investments.

A growing number of investors are choosing one of the L (life cycle) Funds, which are targeted portfolios with a mix based on when you, the investor, say you intend to start withdrawing your TSP account money.

Bottom line: If you know somebody who isn’t taking full advantage of the TSP — either out of ignorance, indifference or because they think they can’t afford it — give them the financial facts of life. They will thank you someday.

Mike Causey, senior editor at Federal News Radio AM 1050, can be reached at 202/895-5132 or mcausey @federalnewsradio.com.

Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times is switching its third-party commenting system from Disqus to Spot.IM. You will need to either create an account with Spot.im or if you wish to use your Disqus account look under the Conversation for the link "Have a Disqus Account?". Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide