Annual Report of the Thrift Savings Plan 

Required by §105 of the 

TSP Enhancement Act of 2009 

June 30, 2018 
Annual Report of the Thrift Savings Plan Page 2 of 3 

Introduction 

In compliance with §105 of the TSP Enhancement Act of 2009, Public Law 111-

31, the Federal Retirement Thrift Investment Board (FRTIB) has prepared this annual 

report which outlines the status of the development and implementation of the mutual 

fund window in the Thrift Savings Plan (TSP) as well as provide participant statistics 

and diversity demographics of the investment manager of the assets in the Thrift 

Savings Fund.

Mutual Fund Window 

In 2013, under order to examine the benefits of and concerns with a MFW, the 

FRTIB assembled a cross-functional team with representation from its operations, legal, 

investment, finance, communications, research, and technology offices. The team 

presented its findings on industry offerings, participant interest, costs, and operational 

considerations to the Board and ETAC in May 2014. However, there were two additional 

areas where the TSP wanted to do additional research – doing a withdrawal survey and 

researching the feasibility of screening the funds offered via the MFW. 

In 2014, FRTIB conducted a survey of participants who made post-separation or 

age-based withdrawals, in order to better understand the reasons funds are withdrawn 

from the Plan. The findings of this survey supported our thesis that one of the reasons 

participants withdraw funds from the Plan when eligible is to achieve greater investment 

diversification. This finding supports the Agency’s proposal to add a mutual fund window 

to the Plan. We also learned that financial need and/or desire for withdrawal flexibility 

were the other significant contributors to age-based and post-separation withdrawals. 

The FRTIB also conducted additional research on the impact and implications of 

screening the number and type of funds that might be made available in the 

MFW. Screens might be based on the cost or type of funds. We determined that filters 

may be added to the platforms, but would likely cause a significant reduction in the 

number of funds available (i.e. limiting access to SRI, emerging managers and sector 

funds). The Board requested that further research be performed on the costs of a 

mutual fund window, both for implementation and maintenance. 

Additional research determined that implementation costs would be roughly $6-

10 million and on-going costs would be roughly $1 million. In July of 2015, the 

Executive Director recommended to the Board Members that a mutual fund window be 

added to the TSP. The Board concurred, with the understanding that if the Agency’s 

understanding of the costs of implementation or maintenance changed significantly that 

the Agency would provide that information to the Board before proceeding. 

Since these decisions, however, Congress passed several pieces of impactful 

legislation. These include the National Defense Authorization Act creating “Blended 

Retirement” for members of the uniformed services which mandated a January 1, 2018, 

effective date, and the TSP Modernization Act of 2017 which mandates additional 
Annual Report of the Thrift Savings Plan Page 3 of 3 

withdrawal options by November of 2019. Both pieces of legislation require significant 

work by FRTIB to implement. As a result, a number of initiatives, including further work 

on the Mutual Fund Window, have been postponed as the Agency works to implement 

these changes. As a consequence, the MFW will not be operational before 2020. 

Investment Manager Diversity Demographics 

The attached report (Appendix A) from the TSP investment manager, BlackRock, 

provides a breakdown of its employee diversity. 

TSP Participant Behavior and Demographics Report 

The 2017 Participant Behavior and Demographics Report is attached to this 

report as Appendix B. This report is an analysis of data extracted from the Thrift 

Savings Plan recordkeeping systems. 
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BLACKROCK55 EAST 52ND STREETNEW YORK, NY 10055

BLACKROCK55 EAST 52ND STREETNEW YORK, NY 10055NEW YORK COUNTY

1-Y 2-Y 3-Y DUNS NO

NAICS: 523

2017 EMPLOYER INFORMATION REPORT

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DATES OF PAYROLL PERIOD: THRU 12/17/2017 12/31/2017

SECTION G - CERTIFICATIONCERTIFYING OFFICIAL: MARIA LOPEZ TITLE: DIRECTOR HUMAN RESOURCES

EEO-1 REPORT CONTACT PERSON: MARIA LOPEZ TITLE: DIRECTOR HUMAN RESOURCESEMAIL: MARIA.LOPEZ@BLACKROCK.COM TELEPHONE NO: 6462310313 CERTIFIED D

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APPENDIX A
Thrift Savings Plan 

Participant Behavior 

and Demographics

Analysis of 2013 – 2017

APPENDIX B
2 

Introduction

This analysis of Thrift Savings Plan (TSP) participant demographics prepared by the Federal 

Retirement Thrift Investment Board is based on participant data. The analysis of calendar year 

2017 data is similar to analysis of data conducted in the previous year.

As with the 2016 report, the 2017 analysis will focus solely on participants in FERS, the Federal 

Employee Retirement System. The participant population in the Civil Service Retirement 

System (CSRS) is a very small and declining segment of the TSP, and the Uniformed Services 

participation will be included after the introduction of the Blended Retirement System in 2018. 

Information from this analysis provides insight on demographics, investment behaviors and how 

plan design changes may have influenced participation and contribution behaviors. Finally, this 

analysis helps us identify trends with participant usage of benefit options. 

Background 

The Federal Retirement Thrift Investment Board is an independent Federal agency that was 

established to administer the Thrift Savings Plan (TSP) under the Federal Employees’ 

Retirement System Act of 1986 (See 5 U.S.C. §§ 8351; 8401 et seq.). Similar to the type of 

savings and tax benefits that many private corporations offer their employees under I.R.C. 

§401(k) plans, the TSP provides Federal civilian employees and members of the uniformed

services the opportunity to save for additional retirement security. The Agency’s mission is to 

act solely in the interest of its participants and beneficiaries. 

TSP participants can invest their employee and employer contributions in the following core 

funds: 

 Government Securities Investment Fund (G Fund)

 Fixed Income Index Investment Fund (F Fund)

 Common Stock Index Investment Fund (C Fund)

 Small Cap Stock Index Investment Fund (S Fund)

 International Stock Index Investment Fund (I Fund)

In addition to these indexed core funds, participants may also invest in five Lifecycle Funds (L 

Funds). The L Funds are custom target-date funds invested exclusively in the G, F, C, S, and I 

Funds. 

During the period covered by this report, the TSP underwent one major plan design change. In 

September 2015 the default investment switched from the G Fund to an age-appropriate L 

Fund. The ongoing impact of this change on participant behavior will be discussed in this

analysis. 
3 

Data Collection and Methodology 

This report is based on data extracted from the TSP recordkeeping system for all TSP 

participants identified as active civilian Federal employees covered by the FERS retirement 

system. 

In the same manner as the 2016 report, agency 1% automatic contributions were used to 

estimate salary. This value is then used to calculate salary quintiles and the average deferral 

rate. This method excludes overtime and performance awards, so does not represent the total 

employee compensation. However, matching percentages are based solely on basic salary 

including locality pay, which excludes overtime and awards. The effect is that the average 

deferral rate (calculated using a smaller denominator) will be higher using this methodology, but 

will match the participant’s elected deferral rate percentage. This effect is expected to be 

roughly equivalent across salary ranges, so the use of salary quintiles will mitigate the impact. 

In this report, salaries are shown in quintiles. The first quintile represents the 20% of all records 

in the lowest annual salary band; the fifth quintile represents the 20% of records in the highest 

salary band. 

In summary, the analysis provided in this report is subject to the following limitations: 

The calculation of salary based on automatic 1% contributions may modestly distort 

the findings compared to reports prior to 2016, showing a higher rate but one more 

representative of the participant’s actual deferral choice. 

The inclusion of TSP accounts for employees of the Legislative and Judicial branches 

may modestly alter the findings when compared to reports prior to 2016. 

The inclusion of TSP accounts for part-time and intermittent workers is likely to have a 

more meaningful impact on the findings compares to reports prior to 2016. Since this 

group is likely to participate and contribute at lower rates than full-time employees, 

this inclusion will also likely result in a negative bias compared to analysis of only fulltime employees, particularly in the lowest salary quintile. 

Employees’ actual deferral rate elections are not included in the TSP databases. 

Therefore, an approximation of annualized deferral rate is calculated by comparing 

the actual total employee contributions to the estimated annual salary rate for each 

calendar year. 
4 

Analysis

The following sections of this report examine the behaviors of FERS participants across a fiveyear timeframe ending December 31, 2017 and through the lens of two demographic filters –

age and salary. The exhibits and narratives display the relationships between these 

demographic factors and participant behaviors associated with participation and automatic 

enrollment, contribution deferral rates, investment allocation, and loan and hardship withdrawal 

usage. 

Plan Participation 

FERS participation was at an all-time high of 92.6% by the end of 2017. Figure 1 illustrates the 

steady improvement in the participation rate since the implementation of automatic enrollment 

for new hires in 2010. Automatic enrollment provides that new employees automatically have 

3% of their salary deferred into the TSP unless the employee makes an active election not to 

participate in the Plan. Until September 2015, contributions for automatically enrolled 

participants were defaulted into the Government Securities Investment (G) Fund. With the 

passage of the Smart Savings Act, Public Law 113-255, the default investment fund for new 

participants changed from the G Fund to an age-appropriate Lifecycle (L) Fund. 

Figure 1 

Automatic enrollment has also led to similar improvements in the participation of the youngest 

and lowest-paid. Reversing historical precedent, the younger the participant, the more likely 

they are to participate. As these participants are also the most likely to have been hired after the 

introduction of automatic enrollment in 2010, there is a clear linkage between the trend in these 

rates and automatic enrollment. Notably, the gap in participation rates between the highest paid 

and lowest paid continues to shrink dramatically, from a 11% difference in 2013 to 5% in 2017. 

See Table 1 below:

89.6% 89.9%

91.1%

91.9%

92.60%

2013 2014 2015 2016 2017

Annual FERS Participation Rates
5

Table 1

Annual FERS Participation Rates by Demographic Cohorts

2013 2014 2015 2016 2017

Age

<= 29 93.3% 94.6% 95.6% 96.8% 96.5%

30 – 39 90.5% 91.3% 93.0% 94.2% 94.6%

40 – 49 88.0% 88.4% 90.2% 91.3% 92.1%

50 – 59 88.9% 89.0% 90.2% 90.8% 91.5%

60 – 69 89.1% 89.1% 89.9% 90.2% 90.8%

70+ 87.8% 87.2% 87.1% 86.9% 87.7%

Salary Quintile

Q1 Lowest Paid 84.3% 85.8% 89.8% 89.1% 91.5%

Q2 Lower Paid 83.8% 84.2% 86.7% 87.7% 89.1%

Q3 Mid-Range 89.4% 89.1% 89.2% 90.2% 90.8%

Q4 Higher Paid 93.1% 93.3% 93.8% 94.4% 94.7%

Q5 Highest Paid 95.7% 95.8% 96.3% 96.6% 96.7%

Auto enrollment has resulted in increased participation rates, with less than 4% of auto enrolled 

participants opting out of making contributions. In addition, auto enrolled participants have 

demonstrated a degree of engagement with the TSP as 77% have actively made deferral

changes, interfund transfers or other transactions since entering the Plan. However, as shown 

in figure 2, the 23% who have made no change since being auto-enrolled are mostly in the 

lowest salary quintiles.

Figure 2

0%

20%

40%

60%

80%

100%

Q1 Lowest Paid Q2 Lower Paid Q3 Mid Range Q4 Higher Paid Q5 Highest Paid

Percent of AE Participants

FERS Automatic Enrollment Status by Salary 

Quintile

Auto-Enrolled AE / Subsequent Activity AE / Deferral Change
6

Contribution Deferral Rates

The FERS deferral rate (includes employee Roth, traditional and catch-up contributions) 

dropped slightly during the five years since the implementation of automatic enrollment, from 

8.4% to 7.9% in 2017 as shown in figure 3. While the FERS deferral rate exceeds the 5.9% 

average deferral rate (ADP)1 of 

other defined contribution plans, 

it is significantly lower than the 

9.5% FERS deferral rates of the 

mid-2000s.

This drop is a side effect of 

automatic enrollment. Automatic 

enrollment brings many new 

participants into the Plan who 

would not otherwise have been 

participating. However, many, if 

not most of these auto-enrolled 

participants have continued to contribute at the 3% default level. This increase in new 

participants at the default level has caused the average deferral rate to slowly decline.

Figure 4 below illustrates the power of plan design on participant behavior. FERS participants

receive dollar-for-dollar matching contributions on the first 3% of pay and 50 cents on the dollar

on the next 2%. The full match is achieved with a 5% contribution. Consequently, deferral rates 

aggregate in the 5-6% range, with 29.7% of TSP contributors being in this range in 2017. The 

impact of automatic enrollment can clearly be seen as the percent of participants contributing 

2% or less shows a steady decline while the percent at the default contribution rate of 3% has 

grown over the last 5 years. Still of significant note, however, 30.9% of participants are not 

receiving the full matching contribution as they are contributing less than 5%.

Figure 4

 

1

“For [Non-highly compensated employees], the median ADP was 5.9% . . ., while the median ADP for [highly 

compensated employees was 7.0%. . . .” Deloitte, Annual Defined Contribution Benchmarking Survey – Ease of 

Use Drives Engagement in Saving for Retirement, 2015 Edition

0%

5%

10%

15%

20%

25%

30%

35%

2013 2014 2015 2016 2017

Participants

Distribution of FERS Deferral Rates

0 - 2%

3 - 4%

5 - 6%

7 - 8%

9 - 10%

11 - 12%

13 - 14%

15%

> 15%

Figure 3

8.2% 8.1%

7.9% 7.8% 7.9%

2013 2014 2015 2016 2017

FERS Deferral Rates 
7

The lowest-paid participants are deferring the least – 4.1% less than the highest paid. See table 

2. However, with an average deferral rate of 5.7%, many of the lowest paid are still receiving the 

full match. The youngest participants have the lowest deferral rates with deferrals steadily 

increasing with age.

Table 2

Annual FERS Deferral Rates by Demographic Cohorts

2013 2014 2015 2016 2017

Age

<= 29 4.9% 4.9% 5.3% 5.3% 5.2%

30 – 39 6.1% 6.1% 6.4% 6.4% 6.4%

40 – 49 7.1% 7.2% 7.2% 7.2% 7.2%

50 – 59 9.0% 9.0% 9.2% 9.1% 9.1%

60 – 69 10.3% 10.2% 10.5% 10.0% 10.3%

70+ 11.6% 11.4% 11.6% 10.8% 11.1%

Salary Quintile

Q1 Lowest Paid 5.1% 5.1% 5.7% 5.5% 5.7%

Q2 Lower Paid 7.4% 7.4% 7.0% 7.2% 7.0%

Q3 Mid-Range 7.3% 7.5% 8.0% 8.1% 7.9%

Q4 Higher Paid 8.6% 8.7% 8.8% 8.9% 8.9%

Q5 Highest Paid 9.7% 9.8% 9.9% 9.8% 9.8%

Roth TSP was introduced in May 2012. With Roth TSP, paticipants make contributions from 

after-tax dollars, and their earnings on these contributions are tax-free at withdrawal as long as 

certain IRS requirements are met. While the majority of participants continue to defer only 

traditional (pre-tax) contributions, deferrals to Roth TSP are increasing. For those contributing to 

Roth, their average deferrals were 5% as opposed to the average traditional deferral of 7.5%.

(Roth and traditional average deferral rates in Figure 5 do not include catch-up contributions 

which are reflected in the deferral rates shown in Figures 3 and 4.)

Figure 5

7.3% 7.3% 7.4% 7.3% 7.5%

3.8% 4.2% 4.8% 4.9% 5.0%

2013 2014 2015 2016 2017

FERS Deferral Rates by Contribution Type

Traditional

Roth
8

Roth deferral rates are highest among older participants, as well as the highest-paid. However, 

most demographic cohorts experienced an increase in Roth deferrals in 2016. 

Table 3

FERS Traditional and Roth Deferral Rates 

by Demographic Cohorts

2015 2016 2017

Traditional Roth Traditional Roth Traditional Roth

Age

<= 29 4.7% 4.8% 4.6% 4.9% 4.5% 4.9%

30 – 39 6.0% 4.6% 5.9% 4.7% 5.9% 4.8%

40 – 49 6.9% 4.4% 6.8% 4.5% 6.8% 4.5%

50 – 59 8.5% 5.1% 8.3% 5.2% 8.7% 5.3%

60 – 69 9.6% 6.7% 9.1% 6.4% 9.9% 6.7%

70+ 10.6% 8.3% 9.8% 7.6% 10.9% 7.9%

Salary Quintile

Q1 Lowest Paid 5.3% 4.5% 5.1% 4.4% 5.3% 4.6%

Q2 Lower Paid 6.6% 4.6% 6.7% 4.6% 6.6% 4.8%

Q3 Mid-Range 7.6% 4.9% 7.6% 5.1% 7.5% 5.1%

Q4 Higher Paid 8.3% 5.1% 8.3% 5.2% 8.4% 5.3%

Q5 Highest Paid 9.1% 5.1% 9.0% 5.2% 9.4% 5.3%

Investment Allocation 

In Figure 6, we note that allocations to the G Fund increase as the 

age of the TSP’s population increases. This behavior is consistent 

with the expectation that participants shift their investment 

allocation toward the relative safety of guaranteed/income 

producing assets as they approach retirement age. The 

noteworthy exception to this observation is in the grouping of 

participants aged 29 and under. In this age cohort, we note that 

participants invest 29.5% of their accounts in the G Fund, probably 

as a result of the default investment option being the G Fund prior 

to 2015. This is a significant improvement from 2014 when the 

youngest participants held 41.7% of their assets in the G Fund.

Figure 6

0%

20%

40%

60%

80%

100%

<= 29 30 - 39 40 - 49 50 - 59 60 - 69 70+

Percent Allocated

FERS Investment Allocation By Age

G Fund

F Fund

C Fund

S Fund

I Fund

Lifecycle Funds

The youngest participants 

who have the longest 

time horizon to reap the 

benefits of compounding 

returns have 29.5% of 

their assets invested in 

the G Fund.
9

The lowest-paid participants have approximately 44% allocated to the G fund as compared to 

the highest paid who allocated only 21% to the G Fund. See Table 4.

When examining L Fund allocations, the two youngest age cohorts had the highest level of 

usage at 41.8% and 34.7% while the two oldest age cohorts had L Fund allocations of 16.9% 

and 11.3%. When compared to 2016, the biggest increases were again in the L fund allocations 

for those under 50. This is most likely influenced by the default investment changing from the G 

Fund to an age appropriate L Fund in 2015. See Table 4.

Table 4

2017 Investment Allocations by Demographic Cohorts

G Fund F Fund C Fund S Fund I Fund L Funds

Age

<= 29 29.5% 0.9% 15.1% 9.0% 3.7% 41.8%

30 – 39 23.2% 2.0% 20.0% 13.2% 7.0% 34.7%

40 – 49 20.4% 3.1% 32.1% 14.0% 7.0% 23.3%

50 – 59 27.9% 4.1% 32.9% 10.9% 5.2% 19.0%

60 – 69 37.4% 5.0% 27.8% 8.6% 4.3% 16.9%

70+ 42.7% 5.3% 28.5% 8.2% 4.1% 11.3%

Salary Quintile

Q1 Lowest Paid 44.0% 2.9% 21.0% 8.4% 4.2% 19.4%

Q2 Lower Paid 38.0% 3.9% 29.6% 9.2% 4.4% 14.9%

Q3 Mid-Range 30.3% 3.5% 26.9% 11.5% 5.6% 22.3%

Q4 Higher Paid 25.1% 3.6% 29.0% 12.7% 6.1% 23.5%

Q5 Highest Paid 21.0% 4.2% 34.9% 12.1% 6.2% 21.7%

Of the participants utilizing the L Funds, the allocation is largely as we would expect. Those in 

the age 29 and under cohort were taking advantage primarily of the L2050 Fund. Participants 

who would likely retire between 2027 and 2037 (the 40-49 age group) were in L2030 and L2040

Funds. The age 50-59 cohort was aggregated in the L2020 and L2030 Funds. Participants aged 

60-69 were solidly investing in the L2020, while those 70 and over had the highest allocation in 

the L Income Fund. See Figure 7.

Figure 7

0%

20%

40%

60%

80%

100%

<= 29 30 - 39 40 - 49 50 - 59 60 - 69 70+

Percent Allocated

FERS L Fund Investment Allocation By Age

L 2050 Fund

L 2040 Fund

L 2030 Fund

L 2020 Fund

Income Fund
10

The L Funds' strategy is to invest in an appropriate mix of the G, F, C, S, and I Funds for a 

particular time horizon. The investment mix of each L Fund becomes more conservative as its 

target date approaches. Thus, the participant only needs to invest in one L Fund in order to 

achieve diversification among the core funds. As shown in Figure 8, the use of one L Fund is 

most common with the two youngest age cohorts – 58.7% for those age 29 and under and 

28.3% for those age 30 to 39. While the percent of participants who invest solely in the F, C, S, 

and I Funds is minor, all age cohorts have a significant percentage of participants investing 

solely in the G Fund. Since 2014, the most significant change can be seen in the younger age 

groups where there has been a significant increase in the number solely invested in one L fund.

This was influenced by the change to an age-appropriate L fund as the default investment in 

2015. See Figure 8.

Figure 8

Loan and Hardship Withdrawal Usage

The TSP allows two types of loans – general purpose and residential. A general purpose loan 

has a repayment term of 1 to 5 years, while a residential loan for the purchase of a primary 

residence has a repayment term of 1 to 15 years. Participants may have only one of each loan 

type outstanding at the same time. Participants may only borrow their employee contributions,

and the minimum loan amount is $1,000.

Loan usage has consistently been highest among the 30-39 and 40-49 age cohorts, with just 

over 10% of the participants in these cohorts receiving a loan in 2017. These rates were 

essentially unchanged from 2016.

Figure 9

0%

20%

40%

60%

80%

100%

<= 29 30 - 39 40 - 49 50 - 59 60 - 69 70+

FERS 100% Allocation in One Fund by Age

100 % G Fund

100% F Fund

100% C Fund

100% S Fund

100% I Fund

100% In One L Fund

Other Allocations

0%

5%

10%

15%

2013 2014 2015 2016 2017

Percent with Loan

FERS Loan Usage by Age

<= 29

30 - 39

40 - 49

50 - 59

60 - 69

70+
11

Participants may take a hardship withdrawal if they have a financial need as the result of a 

recurring negative cash flow, medical expenses, a personal casualty loss, or legal expenses

associated with a divorce. Participants may only withdraw their employee contributions, and the 

minimum withdrawal amount is $1,000. In addition to a 10% early withdrawal penalty if the 

participant is younger than 59 1⁄2, employee contributions are suspended for six months after a 

hardship withdrawal. As a result of the employee contribution suspension, FERS participants do

not receive any Agency Matching Contributions during this period.

Hardship withdrawal usage is consistently highest among the age 40-49 cohort, with 3.5% to 

5% of participants in this cohort receiving a hardship withdrawal during the five years covered in 

this report. All cohorts have experienced a slow decrease in hardship withdrawal usage since 

2013.

Figure 10

There is a stair-step pattern of hardship withdrawal usage among the salary quintiles, with 

usage generally declining as salary levels increase. See figure 11. However, the first quintile

presents an exception to this pattern, as hardship withdrawals were lower than those of the next 

highest quintile in each of the years examined. It is important to note that hardship withdrawal 

usage is lower than loan usage among all salary quintiles. In 2017, the second salary quintile 

had the highest usage rate at 4.6%, which is 2.1% percent drop from the peak in 2013.

Figure 11

0%

1%

2%

3%

4%

5%

6%

2013 2014 2015 2016 2017

FERS Hardship Withdrawal Usage by Age

<= 29

30 - 39

40 - 49

50 - 59

60 - 69

70 +
12

Summary

The analysis reveals an improvement in the annual FERS participation rate with a five-year high 

of 92.6% by the end of 2017. However, the average contribution deferral rate was effectively flat 

at 7.9% - just above the lowest rate in this reporting period. Automatic enrollment was a 

contributing factor to both of these observations.

Automatic enrollment continues to improve participation among the youngest participants.

Participants under the age of 29 now participate at a rate of 96.5% – the highest rate of 

participation among all age groups. Consistent increases were also present when the 

participation rate was viewed from a salary quintile perspective.

The analysis also revealed that the majority of auto-enrolled participants have “engaged” with 

63% making deferral changes. Deferral behavior appears to be relatively unchanged, as 

deferral rates continue to aggregate in the 5-6% range, with 29.7% of TSP contributors falling in 

this range, nearly 70% of FERS participants are estimated to be receiving the full match

(including non-contributors). Participants are gradually increasing their contributions to Roth 

TSP with average Roth deferral rates growing by a tenth of a percent to 5.0% in 2017. When 

comparing Roth vs Traditional deferral rates, it is important to note that dollar for dollar, the 

relative value of a Roth contribution is higher than a traditional tax deferred contribution as a 

traditional contribution will have taxes deducted on withdrawal. An exact comparison, however, 

is not possible as it is dependent on the participant’s future tax bracket.

Participants aged 29 and under continue to have a disproportionate percentage (30.6%) of their 

account balances in the G Fund although this is an improvement from 2014 when 41.7% of their 

balances were in the G Fund. However, this group also has the highest utilization of the L Funds

(41.8%). Rapid changes in these ratios appear to be driven by the auto-enrollment default fund 

change. Overall, participants are investing in the L Fund in a manner appropriate for their age 

cohort. Approximately 27% of participants across all age all solely invested in the G Fund, a 

very low risk fund which may not be the best option for those with longer investment horizons. 

The number of participants choosing this investment option is shrinking, down from 39% in 

2014.

When loan usage is examined by age cohort, the 30-39 and 40-49 age cohorts have the highest 

loan usage rate at approximately 10% each. Loan usage appears to have flattened year over 

year after trending downward among all age cohorts since 2012. The age 40-49 cohort also had 

the highest hardship withdrawal usage, with under 4% of participants in this cohort receiving a 

hardship withdrawal in 2017. From a salary perspective, participants in the second and third 

quintile have the highest rates of usage of hardship withdrawals. The overall trend is for 

decreasing demand for hardship withdrawals across all age and salary groups over the last five 

years.