It's been a while since investors in the federal 401(k) plan had a bad year.

In 1994, the C-fund (tracking the Standard & Poor's 500 stock index) returned only 1.33 percent. That same year, the F-fund (bond index) lost 2.96 percent, and the super-safe G-fund (Treasury securities) returned 7.22 percent.

Since then, the thrift savings plan's C-fund has produced dazzling returns: 37.41 percent in 1995, 22.85 in 1996, 33.17 percent in 1997 and 28.44 percent in 1998.

Data for 1999, which become available next week, will show the C-fund's yearly gain to be about 20 percent.

For the 12 month-period that ended in October, the C-fund returned 25.56 percent. For the 12-month period that ended in November, it "slipped" to "only" 20.79 percent, which still is nothing to complain about.

What's happened on Wall Street this week may remind some feds how good recent past performance has been--and introduce some reality into high-flying expectations.

Like other 401(k) plans, the thrift savings plan was established for steady, long-term investing. The setup has made it virtually impossible for investors to successfully time the market--that is guessing when it has peaked or bottomed out. Currently, it takes two to six weeks to shift investments from one fund to another.

That's going to change in May. Interfund transfers will be processed daily. The Federal Retirement Thrift Investment Board is speeding up the process to give better service to customers. But officials shudder at the thought that some feds will use the expedited system to try to time the market.

No matter how successful market timers claim to be, it's likely that more of them ply their trade from a home-office trailer than from a laptop aboard a yacht.

Would-be market timers--who are looking forward to quick trades--need only look at the monthly performance of the C-fund last year to see how tricky a buy-low-sell-high strategy can be.

In January 1999, the C-fund's return was 4.19 percent. In February, it lost 3.09 percent. But those who panicked (moving from the C-fund to the safer G-fund) found that the C-fund bounced back in March, returning 3.99 percent. In April, it was up 3.86 percent.

In May, the C-fund was down 2.36 percent, in June, up 5.54 percent. In July, it was down again, 3.14 percent. The losses continued in August, 0.50 percent, and September, 2.78 percent. But the C-fund roared back, up 6.34 percent, in October. Then there were gains of 2 percent in November and about 5 percent (data due next week) in December.

In the first few days of this month, the S&P 500--the index tracked by the C-fund--was down 4.5 percent.

That's where it has been, not where it is going.

Financial planner Dennis Gurtz, commenting on recent market gyrations, says the "basically flat market since the end of November is hardly the end of the world."

Tracking the markets in the short term (you can watch it rise and fall hourly on cable TV) can be nerve-racking.

So far, virtually everybody in the thrift savings plan has made money. Some feds have seen their accounts double in a few years. A few high-income, steady C-fund investors now have $500,000 or more in their retirement nest eggs.

Beginning in May, savings plan investors will have two new options--an international stock index fund and a small-capitalization stock index fund--in addition to the C-, F- and G-funds. The savings plan open season, when people can join the savings plan or reallocate future payroll investments, ends Jan. 31.

At 9 a.m. tomorrow on WUST radio (1120 AM), Gurtz will talk about strategies--in good times and bad--for both 401(k) plans and other investments.


At 10 a.m. tomorrow on WUST radio, G. Lee Salmon, of the Environmental Protection Agency, will talk about how agencies can set up coaching and mentoring programs.

Leave Chart

This year's annual leave chart for federal employees is scheduled to run in this space on Sunday.

Administrative Law Judges

Yesterday's column ruined the day for some administrative law judges. The salary table that appeared listed base pay rates for this year, not what administrative law judges will actually get with locality pay adjustments included.

Here are correct figures, with locality pay included, for administrative law judges in the Washington-Baltimore area: AL-3/A, $87,131; AL-3/B, $93,783; AL-3/C, $100,544; AL-3/D, $107,196; AL-3/E, $113,957; AL-3/F, $120,609; AL-2, $127,370; AL-1, $130,200.

Mike Causey's e-mail address is