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The Thrift Savings Plan: Will Reservists Particpate?

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Abstract:

The FY2000 National Defense Authorization Act provided authority to members of the armed services to participate in the federal thrift savings plan (TSP), whose structure is similar to the Civil Service Retirement System. A cost analysis by the Federal Thrift Retirement Investment Board found that extending the TSP to reservists is a poor idea because of the excessive cost of administering many small accounts. However, the authors conclude that although reserve TSP accounts are likely to be numerous and small on average, (a) a relatively small number of reservists are likely to participate and (b) reserve accounts will be larger if prior-service personnel can transfer their active-duty balances. They recommend that reserve participants be allowed to contribute more to their accounts; that the possibility of multiple accounts for one person be reduced; and that funding be made available to the TSP Board to adapt its computer system to handle reserve TSP accounts.