Page 109 - The Informed Fed--Hearn Wealth Management

money to compound, 2) adequate money exposed to compounding, 3) a
sufficient level earnings on those dollars over time--time value of money.

For FERS employees all the money contributed to their accounts vests
immediately with exception of the first 1% automatic agency
contribution (taking three employment years to vest). This means the

FERS employee earns 100% on his/her investment at the 5%
contribution level. Where else can one invest like this?

Not Contributing 5%. Many FERS employees fail to contribute 5%
to the TSP. Their reasons are numerous. When the federal government
formed the FERS program, it was following suit with the private sector.

This changed retirement systems from defined benefit systems (CSRS)
to defined contribution systems (FERS). This change meant that FERS
employees would establish more dependence upon the TSP investments

than the CSRS employees would. Even though CSRS employees receive
no matching government contributions to the TSP, it is still a good idea

to contribute to the TSP.

Not Keeping the TSP-3 current. The TSP-3 is probably the most

overlooked form in the entire benefit system. The TSP-3 form is what
you complete to designate beneficiaries so the funds will be disbursed
according to your wishes when you pass away. This is no small detail. It
can have a huge negative impact for your heirs if it is not completed

correctly. A properly completed and witnessed designation of beneficiary
form, with rare exception, could override any designation of beneficiary

that you have stated in your will. It is very important for you to
periodically review your records to make sure you have completed a
designation of beneficiary form, and to determine whether or not you

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