The agency that administers the Thrift Savings Plan (TSP) — the Federal Retirement Thrift Investment Board (FRTIB) — is amending its regulations to increase the automatic enrollment percentage from 3 percent to 5 percent of basic pay for all participants who are automatically enrolled in the plan on or after October 1, 2020 and for Blended Retirement Service (BRS) participants who are automatically re-enrolled in the TSP on or after January 1, 2021.
FRTIB published this rule change in the Federal Register on Sept. 16. The 5% amount is also the figure a TSP participant must contribute in order to take full advantage of the agency matching contributions. The first 3% of pay that TSP participants contribute is matched dollar-for-dollar. The next 2% is matched at 50 cents on the dollar. Contributions above 5% of pay are not matched.
TSP Matching Contributions
The FRTIB received three comments on the proposed rule. Two comments expressed strong support for the automatic enrollment and re-enrollment rate change noting, in particular, the importance of ensuring that a participant receives the full amount of Agency/Service Matching Contributions he or she is entitled to. The third comment did not address the substance of the regulation. Therefore, the FRTIB is publishing the proposed rule as final without change.
“[P]articipants who are automatically enrolled in the TSP as of September 30, 2020 will not be affected by the automatic enrollment rate increase,” the ruling states. “However, BRS participants who are automatically enrolled in the TSP as of September 30, 2020 and subsequently terminate their TSP contributions will be affected by the automatic re-enrollment rate increase unless they elect to resume TSP contributions by the last full pay period of the year. All participants may elect to change their contribution rates at any time by contacting their respective agencies.”
To read the full text of the ruling, go here.