Over the past several years, the number of federal workers with million-dollar Thrift Savings Plan accounts has jumped dramatically. And the surge is neither scandalous nor illegal. (This statement does not cover Congress).


In April, 2010 there were 75 federal workers with $1 million accounts. By August of this year, that number had jumped to 2,675. It is probably higher today because of the surging stock market.

cropped-lra-logo-blue.jpgBy mid 2014, there were 102,910 active and retired feds whose TSP balances were worth more than $500,000. The TSP has a total of 4.6 account holders.

Why the big jump in TSP millionaires? It defnitely wasn’t pay raises! Feds got a 1 percent pay raise in January after three years of federal pay freezes. They are currently in line to get another 1 percent in January 2015. Even with the miracle of compounding, a 1 percent per year pay raise is not the route to millionaire status.

felix mic indoorsFinancial experts say the boomlet in federal millionaires (outside of Congress) is the result of the post-recession rebound in the stock market and rollovers into the TSP from some high-income appointees who have joined the government. That includes people appointed to diplomatic posts and as federal judges.

To become U.S. Ambassador to some prestigious post, you don’t have to be a millionaire who donated to the winner’s political campaign. But it helps! If you doubt it, ask any career Foreign Service Officer. Some of them have seen some real losers, including a few disasters, appointed not for their knowledge of diplomacy and foreign affairs, but rather because of their ability to write big checks.

A growing number of feds became TSP millionaires the hard way. They invested in the C, S and I stock funds, never flinched when the markets plummeted and continued to buy shares at — as it turns out — bargain prices in 2007, 2008 and as the markets made their slow recovery.

In 2010, the Board that runs the TSP processed 2,700 checks of funds being moved into the TSP from outside retirement accounts. They were worth $66.4 million.

logo_emisora blanco R BamaOn Wednesday’s Your Turn radio show, we talked with financial planner and writer Allan Roth. (The show is archived on our home page, so you can listen anytime). He said the TSP is attractive for rollovers because of its low-fees and the super-safe Treasury securities G-fund option.

Despite the surge in rollovers into the TSP, nearly half the people leaving government (retirement, other jobs, etc.) in 2012 withdrew all their money from the TSP within a year. We’ve been asking people why they did it, and hope to have a report soon. Some of the reasons may surprise you.

Meantime, think seven figures!


How Do I Build A Million Dollar TSP Account?

Mike Causey’s Federal Report

Here’s how to do it:

  1. Invest the maximum amount you are allowed (so you get the 5 percent government match) in the Thrift Savings Plan.
  2. Pick the right fund (or combination of funds). Stick with them, except when you need to change.
  3. Stir occassionaly for 20 to 30 years and wham, bam, you are a millionaire.

It’s been done. Seventy five current feds have TSP accounts worth a million or more, although most did it via the rollover route. .

So is the road to riches the stock market-index funds? It can be a bumpy ride taking you up and down depending on war, weather, economic conditions, the price of oil and even volcanoes in Iceland. Throw in the occasional asteroid strike to make it interesting.

Or do you get rich by playing it safe and sticking with the G-fund which invested in special U.S. Treasury securities that are not available to people outside the TSP? Its payoff is never heart-pounding exciting, but it has never had a loss.

Mike, an employee of the Department of Veterans Affairs takes the slow-but-sure approach. “Becoming a TSP millionaire can be done with zero risk strictly through investing in the G fund,” he says. ” cropped-lra-logo-blue.jpgThere is no need to invest in the risky C, S, and I funds. Just contribute the max each year (currently $16,500) and over a 30 year career you will exceed a million.”

Over the last 10 years the G-fund and the much-neglected F-fund (bonds) have outperformed the stock-index C, S and I funds. But when the CSIs have a good year (like 30 percent returns) it can be avery good year.