More TSP Investment Choices Coming to You
Would you like more investment choices in the Thrift Savings Plan? Well, both Congress and the Thrift Board think you would and will be adding more investment choices in the future. Of course, we do not know exactly what "the future" means, and the Thrift Board has a history of not rushing into things. More choices for TSP investors will not result in the TSP actually adding any more funds to the current mix; rather it will result in TSP investors being allowed to invest their TSP money outside of the TSP in mutual funds managed by private investment companies.
Let's look at what has led up to the TSP's decision to offer more investment choices. The Thrift Board was granted the authority by Congress to add mutual funds to their offerings back in 2009, but they did not indicate that they planned to exercise that authority until about a year ago, in July 2015. One of the Board's major considerations was protecting the "core" funds that we have now and they felt that a "mutual fund window" would be the best way to go about it. Another stated desire was that the TSP retain more participants after separation. It was felt that many of those who rolled their money out of the TSP did so in order to have a greater variety of investments.
The Thrift Board announced its intention to create this mutual fund window in the TSP at their July 2015 meeting and we've heard nothing further since then. This "window" would allow TSP participants to invest their TSP assets in mutual funds. A participant could click on the window (once it available, of course) and be transferred to the website of an investment firm where they could then invest their TSP funds. The concept is simple, the implementation will be challenging.
The Thrift Board will need to solicit proposals from investment firms to establish the window through which participants can invest. The Board estimated that it would take fifteen months from the selection of the investment firm to implement the window, and no investment firm has been selected yet.
The Board also indicated that the extra costs of the available mutual funds would not affect the low expenses of the current "core" funds. This would indicate that all additional investing expenses would be borne by those who choose to invest in mutual funds.
A wild card is how the window would work. Would it allow all types of mutual funds, much like the Combined Federal Campaign allows all charities? Or would it limit offerings to certain funds? I would hope that the funds that will become available through the window would be low expense funds that cover many broad financial areas. Of course, they didn't ask me my opinion.
Posted by: sarah_oz@yahoo.com
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