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Fed Thrift Savings Plan sets May 7 start date for Roth option

Posted On: Apr. 11, 2012 12:00 AM CST

WASHINGTON—The Federal Retirement Thrift Investment Board will include a Roth option for federal employee participants in the $308 billion Thrift Savings Plan beginning May 7.

The Roth TSP option allows participants to invest aftertax dollars in plan funds. It was authorized as part of the Thrift Savings Plan Enhancement Act of 2009, which was enacted on June 22, 2009, according to an investment board spokeswoman.

“The Roth TSP option offers an important new tool for federal civilian employees and uniformed service members in managing their retirement income by providing greater flexibility in the tax treatment of contributions now and in the future,” said Greg Long, executive director of the TSP, in a news release.

The plan currently has five lifecycle funds, a government securities fund, three equity funds and one fixed-income fund.

Many private-sector 401(k) plans also include a Roth option in which participants can make aftertax contributions and withdraw the contributions and investment earnings tax-free, so long as certain conditions are met.

Rob Kozlowski is a reporter for Pensions & Investments, a sister publication of Business Insurance.