Back in May, OhMyGov! alerted federal employees that the House Committee on Oversight and Government Reform was working with Andrew M. Saul, Chairman, Federal Retirement Thrift Investment Board, to improve the federal employee retirement system.  In its original version, anyone not wanting to enroll in the TSP program would be able to opt out of automatic enrollment.  However, it's most recent incarnation stripped that option out.

Recently, the House passed legislation as a companion provision in the Tobacco Control Act (H.R. 1108) that would automatically enroll new federal employees in the Thrift Savings Plan and set their contributions at three percent of basic pay.  The funds from automatic enrollments would be invested in the stable government securities fund to insulate new participants from any potential large losses.

The measure makes two other significant changes to the TSP.  First, it would require the Federal Retirement Thrift Investment Board to include a Roth Individual Retirement Account option in the plan. The difference, TSP Executive Director Gregory Long explains, is that Roth contributions are taken out of income already subjected to income taxes, while TSP contributions come from pre-tax income.  Unlike a traditional TSP or IRA account, when money is withdrawn from a Roth IRA upon reaching retirement, income taxes are not levied upon the withdrawal, since the investment was taxed before it was invested.  This allows money to grow "tax free" in the account.

The new TSP measure also contained a new provision relieving the TSP's fiduciaries of legal liability for allowing plan participants to invest in self-directed investment funds or restricting them from making such investments.

Many federal employees think that automatic enrollment is a good idea, since most people - especially young feds just starting out in their careers - don't have the fiscal diligence to invest money.  Others fear that "Big Brother" may be seizing our fiscal independence.

The political engine is moving fast, so OhMyGov! is alerting all federal employees once again to exercise your rights and  and let your your Senators know if you support this initiative before it goes to the Senate floor and potentially becomes law.

Related Stories:

[+] Tax Year 2008 - Maximize Your Thrift Savings Plan (TSP) Account

[+] House looking to improve TSP

[+] NEED TO KNOW: House Supports New Fed Sick Leave Measure