By Karen Rutzick
Employees can now enroll in the Thrift Savings Plan or shift their contribution levels at any time.
The 401(k)-style federal retirement program operated, until this month, on a system of open seasons. TSP participants were restricted to changing their contributions to two enrollment periods a year: Oct. 15 to Dec. 31 and April 15 to June 30.
But late last year, however, passed
H.R.4324 that eliminated open seasons as of July 1.Gary Amelio, the director of Thrift Savings Plan, said the Internet eliminated the need for open seasons, since investment information can now be posted on a daily basis, instead of monthly.
Board members wanted the TSP to be "competitive with private sector plans, so we asked the Congress to eliminate [open seasons], and we were very happy with that cooperation," Amelio said.
Amelio hopes the change will encourage people who are not investing in TSP or doing so at low levels to participate, and also targets workers who receive raises or bonuses during non-open season months to contribute.
"When people file away the thought [to invest the extra money in the TSP], sometimes they forget about it months down the road," Amelio said.
The regulation does not affect the waiting period that employees enrolled in the Federal Employees' Retirement System must serve before they become eligible for agency contributions to their accounts.
Whether the move will increase overall TSP contributions is not yet known, according to Amelio. He said there will be enough data by September to gauge the impact of the change.
Amelio said also there were two main hurdles to the elimination of open seasons. For one, the TSP's information management team had to adjust systems and work with payroll offices to deal with ongoing contributions and withdrawals. The other was communicating to the public that open seasons were gone.
Participants must continue to file contribution elections with their specific agencies, which will then deduct contributions from employees' paychecks.