TSP — Something to Keep Track Of
TSP officials weigh automatic enrollment of employees
By Amelia Gruber
agruber@govexec.comThrift Savings Plan officials are reviewing recently enacted pension overhaul legislation to determine if they should seek to implement some of its features that apply to the private sector but not the federal plan — including policies on automatic enrollment.
The reform measure, signed by President Bush late last week, aims to boost 401(k) participation in the private sector to 90 percent by encouraging companies to place employees in plans automatically unless they opt out. This provision would not apply to the TSP, said Thomas Emswiler, the plan’s general counsel, in an Aug. 18 analysis…Rest of Article Here:
As of today, no one gets enrolled in the TSP (Thrift Savings Plan) unless they apply for it, so most divorce situations will be covered by the standard conservation of assets court orders routinely issued along with the filing of divorce or legal separation lawsuits.
But this article brings up some interesting points. Since the new retirement plan legislation enables, even encourages private entities to sign up employees automatically, the Federal government may not be far behind.
Automatic TSP signup seems like a good deal all around … employees will start saving from day one, the plan gets more contributions to continue to grow with and administrative overhead should be reduced.
I do see, however, an important area lawyers need to keep in mind then, should such a program come into existence. If a spouse never took any action to join a plan they may ignore assets in the plan either from slyness or actual ignorance. Better make sure your orders make the employee responsible for disclosing any plan participation or even specifically denying membership in the place if a non-participant. Although ignorance of the law is generally not a valid defense it could certainly obfuscate a case if an employee was found to be a plan member at a date date in the proceedings and could show he or she had no reasonable means of knowing they were automatically signed up.
This same situation could present some problems on the purely civilian sector as well. Not long ago I was “fortune hunting” on a state operated website that listed unclaimed assets belonging to citizens but in the hands of various state agencies. I saw the name of a relative an informed him of the listing. When he checked he found out that not only was there money being held for him, but that he was a member of the state PERA (Public Employee’s Retirement Association) due to a part-time job he had held in college. Yes, indeed, he “should” have known, but he didn’t, and there are undoubtedly many others in that position across the country.
Disclaimer
As always remember that this site, although written by a retiree with substantial experience in the school of hard knocks, it is for personal, lay opinions and informational purposes only. If you have a legal question you should seek help from a legal professional. If you have questions involving current or future values of pensions you need an actuary or competent pension valuation expert. If your questions are tax-related, seek a competent tax advisor. In other cases, I recommend the base chaplain.
Related posts:
- TSP — Something to Keep Track Of
- TSP — Thrift Savings Plan — Division and Conservation
- TSP — Thrift Savings Plan — Division and Conservation
- FERS, the Background and Nitty Gritty
- Proper valuation of pension plans
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