Thrift Savings Plan and Federal Employees Retirement System Considerations

Marietta Hall, CFP^® & Dave Valdez, ChFC^®

We recently reviewed the TSP changes from 2022 in the context of our newest team member Dave Valdez. As a traditional guardsman in the Alaska Air National Guard, Dave is fortunate to participate in the Thrift Savings Plan. Recent changes and modernization of the TSP website made his bi-annual review surprising.  We instantly thought of all our clients who might be impacted and the idea for this blog was born. We see that these changes make it worth advising anyone with TSP accounts to make time for a deeper review this year. Some key points to look out for are:

1. Beneficiaries – Dave’s beneficiary designations disappeared with the new changes. There is a new process on the TSP website to ensure that your desired beneficiaries are elected. We highly recommend that you review your beneficiary designations for your TSP as well as all your other accounts. In addition, TSP made other changes that should be reviewed now and could affect the following:
2. 1. Access and security: This means a new login username and password but it also means some robust security features that will help protect you.
   2. Investments: TSP has added mutual funds. We appreciate the increased flexibility, but the added costs should be reviewed carefully if you want to use them.
   3. Withdrawals: There are some enhancements, including electronic signatures and direct deposits capability, that we have not seen in the past.
   4. Loans: Loan rules are now aligned with rules you might be familiar with for 401(k) loans.
   5. Legal processing: There appear to be some increased fees for some legal services like QDROs and Child Support orders.

2. G Fund – Did you know that current debt ceiling concerns could affect the “G Fund?” In Janet Yellen’s letter to Congress, she outlines the extraordinary measures that she anticipates implementing should this Congressional brinksmanship persist. She includes, “suspending reinvestment of the Government Securities Investment Fund (G Fund) of the FERS and Thrift and Savings Plan.” If this measure is triggered, you will not be able to put new money into the G fund until it is lifted and interest payments on your existing G Fund will be delayed until the debt ceiling matters are resolved.

3. Active Military Members – We also see opportunities for active military members to lock in some tax advantages while they are deployed that will benefit their future retirement. It is important to understand how to use the tax advantages afforded by the TSP and how to efficiently dispense the proceeds in their post-military future. If you or your children could use some direction on how to take best advantage of these opportunities, please let us help.

We are happy to assist you in reviewing your TSP and discussing your options. Just reach out to your team and ask them to add it to your agenda. We want to ensure that your TSP reflects your wishes and aligns with your overall financial plan.

2/27/23

^{Adviser Disclosure: Alaska Wealth Advisors is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Alaska Wealth Advisors’ investment advisory services can be found in its Form ADV Part 2, which is available upon request.}

^{Commentary: The opinions expressed are those of Alaska Wealth Advisors Investment Team. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Forward looking statements cannot be guaranteed.}

^{Note: This material should not be construed as tax advice. You should always consult with your tax professional with regard to specific tax questions and obligations.}