Guzzo the Contrarian

Who would have ever thought that smoking would be good for my health? My financial health that is.

As reported in the June 12th Federal Times:

Federal employees will get four new features in their Thrift Savings Plan, including a Roth 401(k) option that allows them to contribute after-tax dollars into their savings plan and then withdraw them at retirement tax-free.

The TSP upgrades were approved today as part of the tobacco bill. The bill — HR 1256, the Family Smoking Prevention and Tobacco Control Act — puts the Food and Drug Administration in charge of regulating tobacco and imposes restrictions on the marketing and production of tobacco products.

As also reported in the same article, Congress’ passage of the bill will bring numerous changes to the Thrift Savings Plan, namely -

1. A Roth 401(k) option, which would let participants put some or all of their after-tax salary into an account that will grow without tax liability on future earnings.
2. Automatic enrollment of new federal civilian employees.
3. A survivor benefit that would allow spouses of deceased TSP participants to maintain TSP accounts.
4. A mutual fund option that would allow participants to direct their TSP funds to private-sector mutual funds. The board would be authorized to select the mutual funds that would be available to plan participants.

As a recent federal employee myself, it goes without saying that I’m excited to have these new investment options and will probably take advantage of this “smoking” deal, especially the Roth 401(k) feature.

But, and not to be looking a gift horse in the mouth, I can’t help but wonder how the heck TSP modifications got attached to a bill designed to protect public health and regulate tobacco products? I’m going to chalk it up to politics as usual.

In case you want to know more about these changes, full details about this bill can be found at GovTrack, or use the custom search box I’ve provided.

H.R. 1256: Family Smoking Prevention and Tobacco Control Act

Related Links:
Mike Causey’s Federal Report
FederalDaily: Thrift Savings Plan