TSP Funds Rebound In February – Find Out How Much

After a rough January, the Thrift Investment Plan’s funds were back in the black for February. In fact, all the retirement funds were up by more than .5%. Kim Weaver is the Director of External Affairs at the Federal Retirement Thrift Investment Board. The Board runs the TSP.

Weaver told Chris Dorobek on the DorobekINSIDER program that the TSP really rebounded in February.

“February wiped out all the losses in January. The S&P 500 hit record levels. All the funds were positive including the F-Fund, which has been trending negative in the past few months. The F-Fund is completely made up of bonds. Year-to-date numbers are all in positive territory. In the last twelve months the L-2050 fund is up almost 22% and the S-Fund is up more than 32%. You can not be disappointed in those numbers.

Is the Board looking to rebrand the L-Funds?

“One of our board members raised the question a couple of months ago whether or not calling the L-Funds a fund was potentially misleading people. His rationale was, we have beaten into peoples heads that they need to diversify their portfolios. Of course, the L-Funds are the diversification, but you are only investing in one fund,” said Weaver.

• How the L-Fund Works: “If you are in your twenties you should be putting your money in the L-2050 fund. It will automatically allocate your funds. You set it and forget it. Early in your career the mix of funds is much more aggressive than they are when you are nearing retirement,” said Weaver

Why rebrand the L-Fund?

“We are going to be looking to call the L-Fund something like lifecycle strategies or lifecycle portfolio. It makes it clearer that you are just supposed to pick one. You don’t have to mix and match funds. But we aren’t going to do this rebranding in a knee jerk fashion. We are going to work with some focus groups featuring our participants. What I have seen in the past, is you put together a communication effort and then you go talk to the people you are targeting and you clearly haven’t framed things well. People bring their past experiences to bear. They draw something completely different from what you are trying to say. We are going to do some research and determine if it is worth the time and effort to do. The L-Fund terminology is in almost every fund we have, so it is going to take some serious work if we go down this rebranding road. We want to make sure that work is worthwhile to do. It will also help us get some information about our participants. We get to hear from them what they need from us, what they think of us,” said Weaver.

What is the status of the proposal to change automatic enrollment?

“Right now when new employees are hired in the federal government, they are automatically enrolled in the G-Fund. We sent a proposal to Congress to switch the automatic enrollment to the L-Fund. We are hoping to get that proposal implemented this year, but we know that Congress moves at its own pace. We aren’t sure whether that will get done this year or not, but that would be getting back to the re-branding issue. If we do rebrand we would want to wait for the legislation so we would have all the changes in place at once,” said Weaver.

How is the Roth TSP option doing?

“We rolled out a Roth TSP option in May of 2012. It wasn’t available to everyone right away, but as of January Roth balances surpassed a billion dollars. It is a very attractive offering especially to the uniformed armed services. The uptick is a little faster than we anticipated, but we have ramped up faster than we anticipated too. So we were happy about that,” said Weaver.