TSP Fees

[spaceman]

Tom,

Just joined TSP Talk.

Saw a Frontline Special on Retirement last night and got depressed.

One major drawback to 401Ks is the fee structure. After looking at my TSP account, the best I can tell is that the fees we pay is very low. Especially compared to the big boys such as Prudential, Stanley Morgan and others.

Can you share any information on TSP fund fees?

Thanks

[sillbeer]

You don't pay any fees with the TSP account. One major drawback to TSP is you only get 2 moves per month.

- Destin

[PLANO]

TSP fees are very low compared to the industry.



http://chart.googleapis.com/chart?chf=a,s,000000|bg,lg,270,FFFFFF,0,BBBBBB77,1 ,FFFFFF,0&chxl=0:|1999|2000|2001|2002|2003|2004|2005|2006|20 07|2008|2009|2010|2011|2012&chxp=0,1,2,3,4,5,6,7,8,9,10,11,12,13,14&chxr=0,0.5,14.5|1,0,0&chxs=0,3E3E3E,12.5,0,l,000000|1,67676700,11.5,0,t, 3D3D3D&chxt=x,y&chbh=a,14,14&chs=700x360&cht=bvg&chco=660066,660066,660066,660066,660066,660066,660 066,660066,660066,660066,660066,660066,660066,6600 66&chds=0,0.12,0,0.12,0,0.12,0,0.12,0,0.12,0,0.12,0,0 .12,0,0.12,0,0.12,0,0.12,0,0.12,0,0.12,0,0.12,0,0. 12&chd=t:0.056|0.055|0.059|0.064|0.102|0.058|0.048|0. 031|0.015|0.019|0.028|0.025|0.025|0.027&chm=t0.056%25,000000,0,-1,11|t0.055%25,000000,1,-1,11|t0.059%25,000000,2,-1.5,11|t0.064%25,000000,3,-1.5,10|t0.102%25,000000,4,-1,11|t0.058%25,000000,5,-1,11,-1|t0.048%25,000000,6,-1,11|t0.031%25,000000,7,-1,11|t0.015%25,000000,8,-1.5,11|t0.019%25,000000,9,-1,11|t0.028%25,000000,10,-1,11|t0.025%25,000000,11,-1,11|t0.025%25,000000,12,-1.5,11|t0.027%25,000000,13,-1,11&chtt=Thrift+Savings+Plan+Fund+Expense+Ratio+1999-2012&chts=000000,20

The TSP expense ratio represents the amount that participants' investment returns were reduced by TSP administrative expenses, net of forfeitures.
Expense ratios may also be expressed in basis points. One basis point is 1/100th of one percent, or .01%. Therefore, the 2012 expense ratio of .027% is 2.7 basis points. Expressed either way, this means that expenses charged to each TSP account in 2012 were approximately 27 cents per $1,000 of investment.

https://www.tsp.gov/investmentfunds/fundsoverview/expenseRatio.shtml

[tsptalk]

Yes, the TSP prides itself on being a low fee retirement savings plan.

[rcknfrewld]

What year did they start hamstringing us with 2 IT

[tsptalk]

2007 they announced it. Made it official in 2008.

[James48843]

The 2 per month trading limit was initiated partially in April 2008, and was formalized in software in June 2008.


In 2003, the TSP moved from once per month moves, to a daily capability to move. The "costs" associated with TSP dropped every year from the moment the daily reallocation was turned on (2003), until they limited the number of moves in 2008.

The reason they gave at the time was that daily moves COST money. In fact, the daily moves SAVED the TSP a huge amount of administrative costs, because the entity at the time that executed the trades was able to leverage the float and turn a profit off of it, leading to the LOWEST COSTS IN HISTORY IN 2007. (0.0015% in 2007 with daily trading ability).

The two-per month limits INCREASED the costs, which now average around 0.025% per year. That still is much lower than most privately managed investment vehicles, but still is not as low as it COULD be, if we had the freedom to move our money as before.

[tsptalk]

For the newer folks here, James was heavily involved with trying to overturn the limits including creating an online petition that got thousands of signatures. Despite his efforts and his claims that the limits would increase costs, which they did, we were ignored by the TSP.

[k0nkuzh0n]

Looking at the chart PLANO posted, the year they started daily IFTs had by far the greatest expense ratio, and while 2007 is the lowest, it was the only year that was less than ANY of the post 2007 years.

[tsptalk]

Looking at the chart PLANO posted, the year they started daily IFTs had by far the greatest expense ratio, and while 2007 is the lowest, it was the only year that was less than ANY of the post 2007 years.
Interesting observation. 2007 was the year that the Ebbchart system was doing really well, had a huge following, and was making several IFT's each month. By May 2008 they shut us down to 2 IFT's. James's analysis was correct.




http://chart.googleapis.com/chart?chf=a,s,000000|bg,lg,270,FFFFFF,0,BBBBBB77,1 ,FFFFFF,0&chxl=0:|1999|2000|2001|2002|2003|2004|2005|2006|20 07|2008|2009|2010|2011|2012&chxp=0,1,2,3,4,5,6,7,8,9,10,11,12,13,14&chxr=0,0.5,14.5|1,0,0&chxs=0,3E3E3E,12.5,0,l,000000|1,67676700,11.5,0,t, 3D3D3D&chxt=x,y&chbh=a,14,14&chs=700x360&cht=bvg&chco=660066,660066,660066,660066,660066,660066,660 066,660066,660066,660066,660066,660066,660066,6600 66&chds=0,0.12,0,0.12,0,0.12,0,0.12,0,0.12,0,0.12,0,0 .12,0,0.12,0,0.12,0,0.12,0,0.12,0,0.12,0,0.12,0,0. 12&chd=t:0.056|0.055|0.059|0.064|0.102|0.058|0.048|0. 031|0.015|0.019|0.028|0.025|0.025|0.027&chm=t0.056%25,000000,0,-1,11|t0.055%25,000000,1,-1,11|t0.059%25,000000,2,-1.5,11|t0.064%25,000000,3,-1.5,10|t0.102%25,000000,4,-1,11|t0.058%25,000000,5,-1,11,-1|t0.048%25,000000,6,-1,11|t0.031%25,000000,7,-1,11|t0.015%25,000000,8,-1.5,11|t0.019%25,000000,9,-1,11|t0.028%25,000000,10,-1,11|t0.025%25,000000,11,-1,11|t0.025%25,000000,12,-1.5,11|t0.027%25,000000,13,-1,11&chtt=Thrift+Savings+Plan+Fund+Expense+Ratio+1999-2012&chts=000000,20


https://www.tsp.gov/investmentfunds/fundsoverview/expenseRatio.shtml

[OBGibby]

To be fair, there appear to be many variables that factor into how the administrative costs are determined. From the link posted above relative to the graph:

The TSP expenses are the costs of administering the TSP. The expenses include:


The management fees for each investment fund,
The costs of operating and maintaining the TSP's record keeping system,
The cost of providing participant services, and
The printing and mailing of notices, statements, and publications.

Expenses are offset by the forfeitures of Agency Automatic (1%) Contributions of FERS employees who leave Federal service before they are vested, other forfeitures, and loan fees. Because these amounts are not sufficient to cover all of the TSP's expenses, TSP participants share in the remainder of the costs.

To imply that administrative costs went up every year since the implementation of the IFT limits because of the IFT limits may or may not be true. From that graph and the accompanying statements pasted above, one could argue that any number of factors have caused administrative costs to go up or down. For example, have TSP users taken out fewer loans in recent years, thus leading to a smaller amount of loan fees to offset the administrative costs of running the TSP? Didn't the TSP put in a new record keeping system in recent years that cost money, further adding to the administrative costs? Have forfeitures of Agency Automatic Contributions decreased? I do not know the answers to any of these questions. I'd like to see some more data on the matter before coming to my own conclusion. For the record, I'd like to see more IFT's allowed.

[grandma]

As I recall there was a time when our IFTs were made via phone or USPS mailings; the changes were made on the 15th and 30th.
Seems like all that they did to us was to revert to the stone ages, but with use of computers....:(

[Sensei]

How do the fees trickle down to us? I don't see anywhere on my statements that they are deducting a fee. Do they take it from the share prices of the funds? :confused:

[nasa1974]

For the newer folks here, James was heavily involved with trying to overturn the limits including creating an online petition that got thousands of signatures. Despite his efforts and his claims that the limits would increase costs, which they did, we were ignored by the TSP.

James did a great job keeping us informed and being at the front of the battle lines for us.

[James48843]

How do the fees trickle down to us? I don't see anywhere on my statements that they are deducting a fee. Do they take it from the share prices of the funds? :confused:

Yes- the share price is just docked a penny or two.

[nasa1974]

As I recall there was a time when our IFTs were made via phone or USPS mailings; the changes were made on the 15th and 30th.
Seems like all that they did to us was to revert to the stone ages, but with use of computers....:(

We really haven't progressed much out of the stone age as far as our TSP is concerned. It was a huge leap when we went from the phone and mail IFT change requests to being able to do the requests on line. I think the noon eastern time stinks especially for those farther west. But, the change from a daily IFT to a 2 IFT a month system has probably lost us more money than what we have seen in profits. I'm not saying that most of us are not making money but our profits could have been higher by reducing our exposure with the chance to move our money in and out of funds more than twice a month. With the size of the FRTIB's budget and how it seems to increase every year, why is it that we can do very little on line regarding our TSP? Almost everything has to be mailed or faxed. In my opinion the FRTIB is an overinflated bureaucracy that is out to protect itself and could care less about what happens to our retirement dollars.

[CrabClaw]

We really haven't progressed much out of the stone age as far as our TSP is concerned. It was a huge leap when we went from the phone and mail IFT change requests to being able to do the requests on line. I think the noon eastern time stinks especially for those farther west. But, the change from a daily IFT to a 2 IFT a month system has probably lost us more money than what we have seen in profits. I'm not saying that most of us are not making money but our profits could have been higher by reducing our exposure with the chance to move our money in and out of funds more than twice a month. With the size of the FRTIB's budget and how it seems to increase every year, why is it that we can do very little on line regarding our TSP? Almost everything has to be mailed or faxed. In my opinion the FRTIB is an overinflated bureaucracy that is out to protect itself and could care less about what happens to our retirement dollars.

A-f'ing-men!