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TSP is going to offer mutual funds.

The US government is going to offer an expensive "mutual fund window" to Federal employees. About $200 to start the fund. $95/year. Almost $30 per transaction. Up to 25% of your TSP can go into this option. Awful fees, but I was wondering if anyone has seen the list of MFs available?


  • edited May 31
    Previously announced changes are coming in June. There is a backout period now.
  • I think you mean blackout. Though looking at those fees, I imagine that participants who signed up for the mutual fund window might want to back out. :-)

    From the link it appears there is not only a $95/year maintenance fee but an additional $55/year fee to protect TSP in case that $95 isn't enough to cover the additional burden of operating the window.
  • The blackout is going on till the end of this week or next week. The mutual fund window (scam....cough,cough) is not open yet so no one has been rooked out of those really horrible fees, yet. I can think of a couple of ETFs that I could put 25% of my TSP balance into and still live with myself. MFs....not so much.
  • I assume they will offer something other than passive index funds, as the C F I E funds and the lifecycle funds fill that bill now. If they use a Fund vendor, like Vanguard's "Fund Access" there might be some useful funds.

    I suspect there are a lot of government folks unhappy with everything but "G" this year
  • Some of the Great Owl MFs could be worthy additions to a closet full of dirty shirts.
  • @johnN : I believe you have a TSP account & wonder if you would like to comment on this topic.
    Contacted daughter-in-law to see what she was doing with this change & she replied, "she was all for it !"
    Stay tuned, Derf
  • I have a TSP account, as a retired Fed and I was appalled with the "mutual fund window"! A yearly fee of $150 and a $28.75 transaction fee just to buy a fund that will likely underperform the C Fund! No way! My money is currently invested in the G Fund in preparation for a trustee to trustee transfer to Fidelity.
  • edited May 31
    Hello Derf/ MFA memers

    I think its a great idea, although have some concerns regarding fees.
    We Will look at it further, but I think tsp is well over due for new fund and fund families.
    I hope get more vanguard type derivatives. I do believe more diverse now and will look at account more carefully and maybe buy more derivatives funds like vanguard star or vanguard primecap core, fidelity contrafund. I wish they allow simple options like put sale or cover call sales and buy sp500 stocks/mid caps stocks, dji stocks, or qqq types vehicles [lcid coke costco for instance]

    Tsp still 90% stocks:10% bondsfixedincomes distribution
  • derivatives funds
    I think you meant actively managed funds. The fees are too high to be worthwhile.

    If the government wants to be competitive. They have to offer solid performing funds with low fees, i.e. institutional shares, without transaction fees. This is what private industry offers to their employees.
  • edited May 31
    Ick. Why not offer everyone costly C-class funds? This is nuts -- better to stick in the existing TSP offerings and save the $150/yr fee.
  • edited May 31
    IMO, TSP holders should stick with the previous strategy of using the TSP stock and bond funds that are among the cheapest index funds around. TSP G Fund (SV) is also doing better (although not as good as TIAA Traditional). Use other funds (from Vanguard, Fido NTF, Schwab NTF, etc) in taxable accounts and IRAs.

    TSP G Fund (SV)

    TIAA Traditional (SV)

    Tracking TSP funds via ETFs in Portfolios at M*, PV, etc
  • There is a fixed administrative cost the employers pay for their employees to the plan administrators. It appears the government want to employees to pay for most of it and that is why you are seeing two layers of fees. Personally this is a losing proposition.

    This year is hard on the investors when both stocks and bonds are falling at the same time. When the he last time this happened? My recent memory goes back to 1994 when Greenspan hiked rates 6 times. Now we are about to enter the same situation.

    Other than TSP G fund, all TSP choices are having double digit loss. Adding active managed funds at this time will not make much difference.
  • edited May 31
    Thankyou so much for insights

    Will think thrice before switching

    Wish they have TNA SPXL SOXL. Gush fgnu fngd. soxs
    Love weekly covercalls and puts on these vehicles
  • msf
    edited June 1
    My experience, admittedly dated, is that administrators add an additional charge for a brokerage (or, I suppose fund) window on a per user basis. An employer can choose to charge just those who use the service to pay for it. This is the approach often taken by employers offering a choice of health care plans. The more a health care plan costs, the more the employee pays to chose that particular plan.

    Or an employer can pick up the window costs. In the end, it is the employees who pay. The employer just spreads the cost among all employees. The employer might, for example, reduce the amount of its defined contribution plan match. The reason is not for the employer to keep more money, merely to break even.

    The net effect is that those who aren't using the window wind up subsidizing those who are. Not much different from investors buying shares directly from a fund subsidizing those who buy NTF. The NTF platform fees raise a fund's ER for all investors.

    When a cost of an added service is made invisible, more people are inclined to use the service. That drives up costs even further for everyone.

    The size of those fees is an independent question. The new fees do seem excessive.

  • Sven said:

    This year is hard on the investors when both stocks and bonds are falling at the same time. When the he last time this happened? My recent memory goes back to 1994 when Greenspan hiked rates 6 times. Now we are about to enter the same situation.

    In 2018, the S&P 500 dropped 4.23% (including divs), 10 year T-bonds dropped 0.02%, and Baa corporates dropped 2.76%.

    In 1994, the S&P rose 1.33%. Quite likely, given that it was a lousy hear for Treasuries (not so bad for corporates, down only 1.32%) that in some months of 1994 stocks and Treasuries both fell.
    (That's a great go-to page for historical data)
  • Whelp the changeover occurred so I can see my account. Had to re-register ;the usual stuff. The mutual fund window option is there but I cannot see the funds available. It says I CAN open the MFW but with the high costs and unknowns...not to keen to sign up just to see what is in it. Don't know if anyone cares but a financial guy I know told me always keep some money in the G fund, even if you move most of your account out at retirement. He worked at PIMCO and Treasury and noted that the G fund by law cannot lose money and can be very responsive to interest rates. FWIW.
  • As mentioned earlier, the TSP G Fund is a unique stable-value fund (SV) with its principal & accumulated interest guaranteed by Uncle Sam (most SVs are guaranteed by insurance companies; some by none, so check about yours). During the debt-ceiling dramas (also unique to the US), the Treasury taps G Fund temporarily but there is no risk of loss to its holders.

    The SV rates keep up with the current intermediate-term rates. The SVs are available only within workplace retirement plans.

    I have mentioned a rule of thumb elsewhere - prefer SV if its guaranteed interest well exceeds the 30-day SEC yield of bond fund under consideration. This has been so in recent years but may change as rate move up.
  • edited June 1
    FYI if you dont like the C I S G fund offered at tsp you can always rolled to your private 401k w/ forms. I would not suggest rolling but its an options if you like trading or place monies in new funds
  • Correct. In-service rollovers to T-IRA are allowed by TSP. Not many retirement plans allow that. 401k/403b vs T-IRA involves other issues covered elsewhere (TSP is formally not 401k, but follows similar rules).
  • msf
    edited June 1
    Since the TSP accounts are not mutual funds, one can't go to a prospectus filed with the SEC. At least there is a 36 page booklet describing the progam.

    However, this program being part of the federal government, it is literally a matter of law. Specifically 5 USC § 8438, and the regulations promulgated under it, 5 CFR Chapter VI.

    Here's one place the law intimates you won't lose money in the G fund. 5 CFR § 1600.37 says
    That an investment in any fund other than the G Fund is made at the employee's risk, that the employee is not protected by the United States Government or the Board against any loss on the investment, and that neither the United States Government nor the Board guarantees any return on the investment.
    As to who gets charged how much for the window, and what it can offer, that's also largely a matter of law.

    The excerpts below are long but I believe informative:
    For the TSP’s brokerage window, Congress has excluded all categories of investments except for mutual funds.¹

    ¹ See Thrift Savings Plan Enhancement Act of 2009, Public Law 111–31, Division B, Title I, sec. 104 (codified at 5 U.S.C. 8438(b)(5)(A)).

    The comments [to this government rule] indicate that many TSP participants are under the impression that other retirement plans negotiate free brokerage services. We looked into what have been described as ‘‘free’’, ‘‘no-transaction-fee’’, and ‘‘zero cost’’ mutual fund trades offered to participants in other retirement plans. We found that those prices are often caveated with fine print disclaimers, such as this:

    No-Transaction-Fee (NTF) mutual funds are no-load mutual funds for which [brokerage firm] does not charge a transaction fee. NTFs, as well as other funds, have other continuing fees and expenses described in the fund’s prospectus. [Brokerage firm] receives remuneration from fund companies for record keeping, shareholder and other administrative services. The amount of remuneration is based in part on the amount of investments in such funds by [brokerage firm] clients.

    The remuneration (i.e., fees) that brokerage firms receive from fund companies are treated by the fund companies as fund expenses, which are ultimately passed on to the people who have already invested in the fund. This type of arrangement between a brokerage firm and a fund company is called revenue sharing. Revenue sharing is not inherently pernicious. In many industries, revenue sharing is like a referral fee that a business owner might pay to compensate a person for bringing a new customer to their business. For most businesses, revenue sharing is a marketing cost borne by the business.

    Fund companies are, of course, businesses also. But fund companies are structurally different from other corporations. They typically have no employees, no physical assets, and no tangible products. They are just a collection of contracts relating to pools of money (i.e., funds), and they charge their costs of doing business to the people who have invested in the funds, regardless of how well the funds perform. Their unique corporate structure has led both Congress and the U.S. Supreme Court to conclude that ‘‘the forces of arm’s-length bargaining do not work in the mutual fund industry in the same manner as they do in other sectors of the American economy.’’ Jones v. Harris Assocs. L.P., 559 U.S. 335, 338 (2010), quoting S. Rep. No. 91–184, at 5 (1969). This does not mean that there is something sinister about the mutual fund industry. It means only that the nature of the product makes the usual distinctions between price, cost, revenue, profit, and quality less clear than they are in other industries.

    Fund companies are not required to provide individualized statements to investors, detailing the exact dollar amount of the fund’s fees that each investor has indirectly paid. Consequently, revenue sharing between retirement plans, record keepers, brokerage firms, and fund companies can lead to confusing, opaque fee disclosures. Revenue sharing converts explicit fees (e.g., account maintenance fees and transaction fees) into less transparent fees (e.g., fees embedded in the fund’s expense ratio). By including the fees in the fund’s expense ratio, the return on an investment in that fund is reduced. Most participants in private sector plans have no idea that revenue sharing exists, much less how much it decreases the return of their investments. [footnote omitted]

    The FRTIB values transparency. We believe TSP participants need, and deserve, to see the dollar amount of the fees they pay for their mutual funds. Toward that end, TSP participants will pay account maintenance fees and certain transaction fees directly rather than paying them indirectly through revenue sharing. Furthermore, FRTIB has contractually required the TSP record keeper, their trading platform provider, their broker-dealer(s), and any of their other affiliates or subcontractors to rebate all revenue sharing payments, or any other type of indirect compensation, they receive in connection with participants’ mutual fund window investments. The rebates will be credited to participants’ mutual fund window accounts. This ensures that the dollar amounts of all fees and expenses borne by TSP participants for services provided in connection with their mutual fund window investments are explicitly disclosed.

    One commenter suggested that a $25-$30 fee would be more reasonable [than $55 for the administrative fee]. This commenter did not offer a rationale for why $25-$30 would be more reasonable or suggest an alternative means of deriving an appropriate fee amount. Another commenter suggested that all TSP participants should share in the cost of the mutual fund window. We believe this suggestion would conflict with an explicit Congressional directive to ‘‘ensure that any expenses charged for use of the mutual fund window are borne solely by participants that use such window.’’ 5 U.S.C. 8438 (b)(5)(B). We are, therefore, adopting the proposed rule as final without substantive change.
  • edited June 1
    Is that some drool I see on the lips of fund management country wide? (If you don't follow the TSP doings over time, you have missed the various political maneuvers used over the years in an attempt to move the TSP into the skim paradises (female owned small investment business promotion, letting more firms share the wealth and management, etc.) The flavor of the argument depends on who wants the expansion and what audience is being targeted. In the past, this has not been much of a threat.

    My paranoid, suspicious mind is musing how, after this is sealed in superglue to the TSP program, the more egregious the costs, the better the argument for restructuring the fund more like retirement funds run elsewhere. (You know any old stable value fund is the same as the G-fund, all have index funds with low fees, etc.) Why not Voya; they throw the best parties? (adlib from Delaware move of their retirement funds from Fidelity to Voya.

    And, yes, I do know that all my comments are just idle wondering and wandering.
  • edited June 1
    In-service rollovers to T-IRA are allowed by TSP. Not many retirement plans allow that. 401k/403b vs T-IRA involves other issues covered elsewhere (TSP is formally not 401k, but follows similar rules).
    Yes, one can rollover their TSP account to a traditional IRA at brokerages AFTER they retire or leave their federal service/ jobs. At the brokerages one can have many choices (almost too many).

    My understanding is that rollover the TSP account while still working maybe allow depending on the plan administrators. So best to ask the TSP administrator.

  • edited June 1
    Boss retired 4 yrs ago and rolled
    Another friend left and rolled to Fidelity

    Will call tsp but think there is a form they will mail you to roll

    I am staying not rolling but there are options out there if decide leave govt job here
    The other option is put minimum into tsp 6% (not 17 18%) and transfer all new incomes into private ira
  • Well I found out that Pershing is the back office site.
    Buried in the site about the MFW of the TSP site:
    "If you cannot access us through either of these
    means, contact the clearing broker directly, at (201) 413-
    3635, or for recorded instructions call (213) 624-6100,
    extension 500."
  • The IRS restricts in-service withdrawals (if permitted by the plan) to only those participants over age 59½ or who a hardship exception.

    TSP does permit these in-service withdrawals. But even then,
    You can make an age-59½ withdrawal only from an account that’s associated with your active employment. So, for example, if you have a uniformed services account but have left the uniformed services and are now a federal civilian employee, you can only make an age-59½ withdrawal from your civilian TSP account.
  • edited June 1
    The other option is put minimum into tsp 6% (not 17 18%) and transfer all new incomes into private ira
    Not sure what private IRA you are referring to. Think you need to look at the actual $ amount allow in 401(k) contribution, not % of your salary. Putting in enough to get maximum employer matching is a good way to go. Outside that you can contribute to a Roth IRA account at brokerages where one gets many choices. Maximum limit is $6K ($7K if age is over 50) for 2022.

    I am surprised to see TSP wanting to this change, almost several decades behind the private industry. I have had Fidelity and Vanguard as my 401(K) administrators, and they are very good with their services and investment choices. Another friend has access to the entire Schwab’s mutual fund platform and that a bit over the top.
  • edited June 1
    Hi sir Mr Sven
    If you have private business/personal business you can sign up sep-ira and can contribute 20 -25% of incomes (in addition to Tsp) legally...

    Other have preferred benefits plans -up to 250k yearly contributions

    Lots folks (brother too) have sep ira and they continue to contribute 50s k per yr (you can defer tax now or wait til 59.5 but uncke Sam sure will get his share now or later)...
  • Good for you. Learn something new every day
  • Anna your suspicions are correct! In 2025, if the GOP gains control of the WH, Senate and House, one of their priorities will be turning the TSP over to some fund management behemoth like Blackrock, Fidelity , Voya, Prudential Financial, etc-whichever firm makes the largest and most strategic campaign donations!
  • BlackRock/BLK has been TSP fund manager for years (except for SV G Fund that is directly under the Treasury Secretary). State Street/STT was recently added as 2nd manager for small portions.

    FWIW, the US Government also relied on Blackrock's risk asset management tools during the financial crisis.
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