How did your retirement plan fare in 2014? Are there any changes you should make as we head into 2015? As the calendar flips ahead to a new year, January is the perfect time to make sure your retirement plan is running smoothly.
Kim Weaver, Director of External Affairs at the Federal Retirement Thrift Investment Board, joined us for her monthly segment looking at the TSP with Chris Dorobek on the DorobekINSIDER program. Weaver explained that 2015 was a pretty great year for the TSP.
Let’s get the numbers out of the way first. All in all, 2014 was a pretty great year for federal retirements. The G-Fund was up 2.3%. The F-Fund was up 6.7%. The C-Fund was up 13.8. The S-Fund was up 7.8 %. The only fund in the negative was the I-Fund was down 5.3%, but Weaver wasn’t surprised. “With all the upheaval in Europe in 2015, the slight decreased in the I-Fund was expected.
2014 also brought about a few changes to the TSP. Historically, new federal employees were automatically enrolled in the G-Fund (the never have a bad day fund) at a 3% level.
But last year the TSP Board sent a note to Congress to have them make a change. In December the President approved the new plan that will enroll employees in the L-Fund (lifecycle fund) instead.
Weaver explained, “If you’re a new employee, you will be able to sign up for whatever funds you want. However, if you don’t make a choice you’ll be auto enrolled into the age appropriate L-Fund. The L-Fund looks at your birthdate and based on the age bracket puts you in appropriate lifecycle funds. If you were a 22 year old you’d be placed in the L-2050 fund.”
Another change was to deferral rates. “Now federal employees can contribute their personal contributions to the TSP can be up to $18,000,” explained Weaver. “If you’re 50 or older and you’re contributing $18,000 you can then also contribute an additional $6,000. The overall annual limit is $53,000. “
Finally for the military there is a change that requires immediate action, if you are enrolled in the Roth contribution plan. “DEFAS – the payroll system for the military – has changed their system. In order for military to continue making Roth contributions they have to make a change into percentage, not dollar. If they don’t do it by January 31st those contributions will stop. If you are contributing a dollar amount right now to a Roth TSP, you need to go to DEFAS and change it to My Pay, and change it to a percentage of your pay,” said Weaver.