TSP Age Requirements Changed by Two Secure Act Provisions

A House retirement bill proposes modifications to TSP benefits. The Federal Retirement Thrift Investment Board (FRTIB), which oversees the TSP, said two parts of the Securing a Strong Retirement Act of 2021 would affect participants.

First, the bill would expand the mandatory distributions’ start date. The current minimum distribution age is 72. Under the bill, the age is 73 for people turning 72 in 2022 and 73 before 2029. While for those turning 73 after 2028 and 74 before 2032, the age is 74. Finally, the age is 75 for people turning 74 after 2031. Changes will begin applying in 2023. 

The second part is the requirement that all catch-up contributions must be Roth. The bill’s revisions to this section take effect upon enactment. 

The board also monitors a TSP-related bill. Rep. Ted Budd introduced legislation on March 17. (R-N.C.). Terminating Securities from Putin Act would ban TSP investments in Russia. If passed, the law would give FRITB 30 days to assess TSP assets and relocate Russian funds. 

Budd added that the bill “draws a line in the sand” and reassures 6 million military and federal workers. 

No TSP funds have Russian investments, the board stated. 

Congress is also attempting to markup the five FRTIB candidates on March 30. The markup follows a nomination hearing this month. Four nominees were released in August, and the fifth was announced in November. The board oversees TSP and FLRA. 

Resolved Board Staffing Issues Boost Participation

Outside of Congress, the board examines TSP participation. The board stated that the number of participants receiving full matching increased this month. Mainly, active duty BRS participants are up to nearly 78%. 

Along with these organizations, FERS participation reached 95% in February, a new program milestone. It was 94.9% last month and 94% a year ago. Uniformed Services participation is now 81.1%. Last year, it was 77%. In February, automatic enrollment for new participants boosted L fund participation due to automatic enrollment for new participants. 

Rising TSP participation puts pressure on the board to address contact center staffing and recruitment issues. Pandemics and supply chain concerns cause staffing shortages. The TSP indicated that it aimed to restore service levels by March; it has now reached that objective and is starting to pay dividends. 

While TSP participation rates are rising, the overall plan balance has declined. Since 2012, contributions and disbursements have increased, but net cash flow has slowly decreased during the same period. According to the board, February’s TSP balance was $769.5 million, less than January’s $780.6 million and December’s $811.7 million. 

The F, C, I, and L funds all recorded losses in February, while the S fund was relatively flat. Inflation and geopolitical concerns, including Russia’s invasion of Ukraine, increased market instability. 

The board called March thus far “mixed.” The C fund is up 1.99%, the S fund is down 0.28%, and the I fund is down 0.86%. Regarding fixed-income funds, Fixed income funds F is down by 2.62%, and G is up by 0.12%. 

Converge Program is Scheduled to Launch in the Middle of the Year

The Converge program will update TSP’s back-end management and security to improve the participants’ experience. Last month, the board announced that the initiative is on track in all areas and will debut midyear. Converge will also have a mobile app, a mutual fund window, and increased security. 

The board has tested Converge data groups to assure proper operation. Simulating program processes helps make Converge more efficient and user-friendly. The FRTIB transferred Converge’s fourth and final test data on February 25. 

The board said they’d bring service modifications and planned downtime for Converge next month. Mid-April will notify all participants and beneficiaries regarding the upcoming changes. Participants with contact information will receive emails, while others will get information through the mail. The board works with third-party partners to notify all participants.

Testing is expected to wrap up in mid-May. According to the board, converge will be available to TSP participants in the middle of this year.

Contact Information:
Email: rick@andrikfinancial.com
Phone: 9568933225

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