TSP Transfer Fees and/or Transaction Limit Discussion

[SkyPilot]

Let's all send Mr. Causey a note regarding his article supporting interfund transfer fees.

mcausey@federalnewsradio.com

Here is one suggestion for text: Add, modify or compose your own.

Dear Mr. Causey,

I am opposed to fees for Thrift Savings Plan (TSP) interfund transfers (IFTs). It has not been demonstrated that IFTs incur any appreciable cost, and certainly would cost no more than the daily rebalancing of the L funds.


The cost for management of TSP are lower than any other similar plan, and the cost continues to decline. An imposition of fees just for the purposes of having fees without any other justification would certainly be in conflict with the purposes of providing all federal employees the most flexible options at the lowest cost possible.

Please consider these issues when discussing the plan, and refrain from suggesting that changes be implemented for the sole purpose of change itself, or to manage or modify the independence and autonomy of the Thrift Savings Plan participant.It is my belief that I can manage my finances better than a bureaucracy when given the tools and opportunity.


Respectfully submitted,

[tsptalk]

Sounds good.

[SkyPilot]

Also, let's make sure we request email confirmations when making IFTs. Having hard copy mailed each time probably ends up costing around a buck each time e.g., materails, postage and handling, etc.

If you have never done it or don't know that you can, just type in your preference of email address in the space provided on the page you enter your IFT on (usually just above and before the spaces where you enter your transfer allocations).

Let's all work together to save trees and expenses!

If you want a hard copy, print the confirmation on your own when it arrives as an email, or copy the screen confirmation(ctrl + PrtScn) and paste it into a document.

Good luck!:)

[whitemingo]

Excellent recommendation.

I have had mine on email returns and had forgotten that this was a request that you needed to make.

[Wasaki]

It has not been demonstrated that IFTs incur any appreciable cost, and certainly would cost no more than the daily rebalancing of the L funds.

If you are asking for support or a demonstration for the above statement, then you might want to be able to prove the lower statement with a link to a report as support.

The cost for management of TSP are lower than any other similar plan, and the cost continues to decline.

Which maybe there is somewhere and it is common knowledge on Mr. Causey's discussion boards but I don't know since I am knew to all this discussion. So if there is, could you point me to this so I could read it? I would love to write an email too and your letter is a good model for all of us to write our own.:)

[CountryBoy]

Email has been sent to Causey. :D

CB

[Lobo]

I also sent Mike an email!

Thanks SkyPilot

Lobo

[jlpost]

THANKS!

Email sent.

I basically used yours and added this sentence to the end of the first paragraph...which anyone here is welcome to use.

Rather than use the L funds, I prefer to create my own "fund" and rebalance as I choose, rather than daily as the L funds do.

[weatherweenie]

Sent a copy. Thanks for taking the time to write a letter up.

Let's all send Mr. Causey a note regarding his article supporting interfund transfer fees.

mcausey@federalnewsradio.com

Here is one suggestion for text: Add, modify or compose your own.

Dear Mr. Causey,

I am opposed to fees for Thrift Savings Plan (TSP) interfund transfers (IFTs). It has not been demonstrated that IFTs incur any appreciable cost, and certainly would cost no more than the daily rebalancing of the L funds.


The cost for management of TSP are lower than any other similar plan, and the cost continues to decline. An imposition of fees just for the purposes of having fees without any other justification would certainly be in conflict with the purposes of providing all federal employees the most flexible options at the lowest cost possible.

Please consider these issues when discussing the plan, and refrain from suggesting that changes be implemented for the sole purpose of change itself, or to manage or modify the independence and autonomy of the Thrift Savings Plan participant.It is my belief that I can manage my finances better than a bureaucracy when given the tools and opportunity.


Respectfully submitted,

[crhuss]

Recently, there has been a lot of talk about limiting or charging fees for IFT in the TSP. This kind of thinking is inappropriate on several levels, yet it seems to be gathering steam and moving forward. To make matters worse, Mike Causey indicated in a radio broadcast that 4 out of 5 TSP participants favor either limiting the number of trades or charging a fee for each IFT. This would be devastating to us TSPtalk members.

There have been some discussions on Ebbnflow's tread about fees for IFTs, and Truehonest suggested that we e-mail Causey and tell him our feelings as they represent the feelings of the vast majority of TSP participants. I did just that. I sent an e-mail to Mike Causey last night indicating my disagreement with his statistics. I told him that he needed to get out of the ivory tower of the beltway and find out what the majority of the TSP participants wanted. I received an immediate response indicating that those statistics are what he received from the e-mails he had received. He said that he appreciated my opinion and would use my e-mail in his broadcast. That suggests that Mike seems to be willing to tell "the rest of the story" if we just give it to him. So we all need to e-mail Mike, and whoever else will listen (including our congressmen), to let them know how we feel about the fees for trade idea.

In order that we might have a united front in our e-mail efforts, I started this tread to compile a list of the reasons why limiting or charging fees for IFT is a bad idea, so those ideas can be included in every e-mail.

Listed below are some of the reason that come to mind right away, and I would like everyone to add to it so we can have a comprehensive list of the reason that this is a bad idea.

1. Fees for IFTs goes against the Feds original premise and motivation for establishing the TSP to begin with. The Fed have spent a lot of money trying to get government employees and military personnel to contribute to the TSP as a means of improving their retirement income so they won't become a burden on the government resources after retirement. Fees for trades would discourage the use of the TSP rather than encouraging individuals to participate in it.

2. The motivation behind TSP participation is to save our current income for our future retirement so we won't become a burden on the government when we retire. The motivation of the private sector is profit motivated so investors can make more money now to purchase new cars, boats, houses, etc. Most private sector stock market investments are not for retirement purposes where that income acquired is used for retirement.

3. The Feds established the 'L' funds as part of the TSP program, which makes no fee trades every day to meet the needs of those participating in that fund. Why should be be penalized by paying a fee just because we choose to make our own trades rather than having a committee in Wash D.C. do it. Changes are made every day to the TSP without a fee associated with it, i.e. payroll deductions to purchase fund shares, 'L' fund transfers, TSP loans, money taken out of the TSP as income by individuals, etc.

4. Trades or IFTs in the TSP are far less expensive than in the private sector. In fact, TSP IFTs are the most efficient in the industry.

5. There are less than 1% of the TSP participants that perform more than a dozen trades a year. Most just buy and hold. The cost of administering the fee for trade for the few who perform frequent trades would be more costly than the revenue received.

6. In the private sector, where fees for trades is the norm, buyer and sellers get professional advice before making trades, which is the primary cost of the trade. And they are able to trade immediately rather than having to wait almost 24 hours before their trades are effective.

7. If the Feds start charging for IFTs then any funds changes, which includes purchases, withdrawals, and well as IFTs, should require a fee, which would be a nightmare.

These are just a few of the ideas I have on the top of my head. Please help us all out and add to the list , or correct any obvious errors I have made (I tend to ever-exaggerate at times).

Thanks for your help!

[crhuss]

It seems that we both had the same idea here. I just started a thread on Fees for Trades (IFT) also today. Spaf suggested I do it based on my input in ebbnflows tread yesterday. Maybe we can join the two together, but I don't know how to do that. Anyway, check out my thread. I am starting a list of reasons why the Feds should not create fees for IFTs. I also sent Causey an e-mail and he responded favorably in a return e-mail.

[SkyPilot]

It seems that we both had the same idea here. I just started a thread on Fees for Trades (IFT) also today. Spaf suggested I do it based on my input in ebbnflows tread yesterday. Maybe we can join the two together, but I don't know how to do that. Anyway, check out my thread. I am starting a list of reasons why the Feds should not create fees for IFTs. I also sent Causey an e-mail and he responded favorably in a return e-mail.

crhuss,

Your letter was way, way better than mine!
Great points and sound logic. :)

[crhuss]

Here is a copy of the letter I sent to Mike Causey yesterday. Hope you enjoy!!

Hi Mike, I understand that you indicated in your column that 4 out of 5 TSP participants are in favor of limits or fee associated with interfund transfers. I don't know who you asked, but nobody I talk to is in favor of such a short-sighted approach to ensuring retirement stability.

The Fed established to TSP to encourage government employees and military personnel to put some of their current earnings aside for retirement. Charging a fee will only discourage people from saving in the TSP.

It doesn't make much sense to penalize those of us that take an interest in securing our future with a fee for moving our own funds around. The private sector (you know...the ones that are in it only for a profit to fill their pockets and buy new cars and boats) pays cause that is a business for profit for them. WE are only trying to improve on our retirement so we are not a burden on the government in our advanced age.

Besides, it costs a lot more for the private sector to make transfers than it costs those traders in the TSP. We are the most efficient traders in the business, and we are limited in where and how we can trade. Trading to ensure retirement goals is why the Feds instituted the 'L' funds which trades every day to ensure a specific amount at retirement age for their participants. There is no cost for the 'L' fund to trade. Why should those of us in the C S I or F funds be treated any different just because we make our own decisions rather than relying on some committee in Washington to do it for us.

It is no more fair to charge us for trading than if we had to pay a fee each time we had our payroll deductions put into the TSP every payday; or charged a fee every time the 'L' funds made a transfer.

IT seems that the entire mission of the TSP (to create a vehicle to help government and military personnel invest in their retirement) is being twisted and forgotten when a fee is charged for trying to be responsible with our retirement funds. Besides, there are less than 1% of the TSP participants that trade funds more than a dozen times in a year. It would cost more to implement and administer than it would save.

You probably need to get out of your ivory tower in Washington, D.C. and talk to the millions of government employees and military personnel outside the beltway. They will paint a very different story. NObody wants to be required to pay a fee to save for their own retirement with their own money.....Nobody!!!!

[Dbog]

Any consideration on Mike receiving butt loads of e-mail from our work accounts? Can he spin that or am I wasting too many brain cells thinking about it? Anyone e-mailing Mike from their work account?

DB

[SkyPilot]

All of them were sent during lunch breaks! :nuts:

[tsptalk]

It seems that we both had the same idea here. I just started a thread on Fees for Trades (IFT) also today.
Thanks! I merged your thread in here.

[Aspiration]

Here is a copy of the letter I sent to Mike Causey yesterday. Hope you enjoy!!

Hi Mike, I understand that you indicated in your column that 4 out of 5 TSP participants are in favor of limits or fee associated with interfund transfers. I don't know who you asked, but nobody I talk to is in favor of such a short-sighted approach to ensuring retirement stability.

The Fed established to TSP to encourage government employees and military personnel to put some of their current earnings aside for retirement. Charging a fee will only discourage people from saving in the TSP.

It doesn't make much sense to penalize those of us that take an interest in securing our future with a fee for moving our own funds around. The private sector (you know...the ones that are in it only for a profit to fill their pockets and buy new cars and boats) pays cause that is a business for profit for them. WE are only trying to improve on our retirement so we are not a burden on the government in our advanced age.

Besides, it costs a lot more for the private sector to make transfers than it costs those traders in the TSP. We are the most efficient traders in the business, and we are limited in where and how we can trade. Trading to ensure retirement goals is why the Feds instituted the 'L' funds which trades every day to ensure a specific amount at retirement age for their participants. There is no cost for the 'L' fund to trade. Why should those of us in the C S I or F funds be treated any different just because we make our own decisions rather than relying on some committee in Washington to do it for us.

It is no more fair to charge us for trading than if we had to pay a fee each time we had our payroll deductions put into the TSP every payday; or charged a fee every time the 'L' funds made a transfer.

IT seems that the entire mission of the TSP (to create a vehicle to help government and military personnel invest in their retirement) is being twisted and forgotten when a fee is charged for trying to be responsible with our retirement funds. Besides, there are less than 1% of the TSP participants that trade funds more than a dozen times in a year. It would cost more to implement and administer than it would save.

You probably need to get out of your ivory tower in Washington, D.C. and talk to the millions of government employees and military personnel outside the beltway. They will paint a very different story. NObody wants to be required to pay a fee to save for their own retirement with their own money.....Nobody!!!!

Wow. Very well written crhuss! :nuts:

[fabijo]

Can we really claim that the daily rebalancing is the same as making an IFT on a near daily basis? The way I understand the daily rebalancing is like this scenario:

Looking at the current quarter of the L2040 allocation.
G 7.2%
F 9.8%
C 41.2%
S 17.6%
I 24.2%

Now tomorrow, each fund increases or decreases by some percentage. The daily rebalancing is the small changes that need to be made to make sure your portfolio still has the same allocation between funds as listed above. I can't imagine that the daily rebalancing requires the amount of transactions as switching 100% of your funds on a daily basis. It seems that maybe a percent or two would be involved in the daily rebalancing from the L Funds, while our IFTs are usually 25% or more.

[SkyPilot]

Can we really claim that the daily rebalancing is the same as making an IFT on a near daily basis? The way I understand the daily rebalancing is like this scenario:

Looking at the current quarter of the L2040 allocation.
G 7.2%
F 9.8%
C 41.2%
S 17.6%
I 24.2%

Now tomorrow, each fund increases or decreases by some percentage. The daily rebalancing is the small changes that need to be made to make sure your portfolio still has the same allocation between funds as listed above. I can't imagine that the daily rebalancing requires the amount of transactions as switching 100% of your funds on a daily basis. It seems that maybe a percent or two would be involved in the daily rebalancing from the L Funds, while our IFTs are usually 25% or more.

IMHO, the amount is not so important as the instance.

As I understand it, all this is handled electronically, iand therefore a moot point, really. The TSP website in it's Q and A section on the L funds states that an individual could do this themselves, but points out that the effort would not justify the result.

At the end of each day, TSP batches all the transactions, both L and individual, and makes "buys" of each fund as needed to satisfy the transactions of the day, essentially 5 purchases. Much like one person going to the fast food place with all the office orders. The person does not place 15 seperate orders, but orders 10 burgers, 2 chicken sandwiches and 3 burritos (does this analogy work :nuts:) even though 2 people order burgers everyday?.

[SkyPilot]

Just FYI

[68 FR 35496, June 13, 2003] [[Page 183 - 183]

TITLE 5--ADMINISTRATIVE PERSONNEL CHAPTER VI--FEDERAL RETIREMENT THRIFT INVESTMENT BOARD PART 1601_PARTICIPANTS' CHOICES OF INVESTMENT FUNDS--Table of Contents Subpart D_Contribution Allocations and Interfund Transfer Requests Sec. 1601.32 Timing and posting dates. (a) Posting dates. (1) A contribution allocation or an interfund transfer entered into the TSP record keeping system by a participant who uses the TSP Web site or the ThriftLine, or by a TSP Service Office participant service representative at the participant's request, at or before 11 a.m. central time of any business day, will ordinarily be posted that business day. A contribution allocation or an interfund transfer request made on the TSP Web site, the ThriftLine, or with a TSPSO participant service representative, after 11 a.m. central time of any business day will ordinarily be posted on the next business day. (2) A contribution allocation or an interfund transfer request made on the TSP Web site or the ThriftLine on a non-business day will ordinarily be posted on the next business day. (3) A contribution allocation or an interfund transfer request made on Form TSP-50 or Form TSP-U-50 will ordinarily be posted under the rules in paragraph (a)(1) of this section, based on when the form is entered into the TSP system by the TSP record keeper. The TSP record keeper ordinarily enters such forms into the system within 24 hours of their receipt. (4) In most cases, the share price(s) applied to an interfund transfer request is the value of the shares on the date the relevant transaction is posted. In some circumstances, such as error correction, the share price(s) for an earlier date will be used. (b) Limit. There is no limit on the number of contribution allocations or [[Page 182]] interfund transfer requests that may be made by a participant. (c) Multiple contribution allocations or interfund transfer requests. (1) If two or more contribution allocations or two or more interfund transfer requests are received for a participant and would be posted on the same day, the following rules will apply: (i) If one or more of the contribution allocations or interfund transfer requests are submitted through the Web site or the ThriftLine and one or more are made on Form TSP-50 or Form TSP-U-50 and would be posted on the same day, only the latest contribution allocation or interfund transfer request made through the Web site or the ThriftLine will be posted. (ii) If one or more of the contribution allocations or interfund transfer requests are made through the TSP Web site or the ThriftLine, only the contribution allocation or interfund transfer request entered at the latest time will be posted. (iii) If the contribution allocations or interfund transfer requests are submitted using Form TSP-50 or Form TSP-U-50, the forms will be posted in the order the TSP record keeper receives them. (2) For purposes of determining the date and time of a contribution allocation or an interfund transfer request in applying the rules of this paragraph (c), the following rules apply: (i) The date and time of a contribution allocation or interfund transfer request made through the TSP Web site or the ThriftLine is the date and time the participant confirms the percentages. (ii) Central time is used for determining the date and time on which a transaction is entered and confirmed through the TSP Web site or the ThriftLine. (d) Cancellation of contribution allocation or interfund transfer request. (1) A contribution allocation or an interfund transfer request may be cancelled through the TSP Web site or the ThriftLine, through written correspondence, or by contacting a participant service representative. (2) A contribution allocation or an interfund transfer request may be cancelled by entering the cancellation on the TSP Web site or the ThriftLine only up to the deadline, described in paragraph (a) of this section, which applies to the original request. If a change or cancellation is received after the deadline, the original request will be processed as scheduled. Any subsequent request will then be processed in turn. (3) A participant may also cancel a contribution allocation or an interfund transfer request by submitting a letter to the TSP record keeper that requests cancellation and meets the following requirements: (i) The cancellation letter must be signed and dated and must contain the participant's name, Social Security number, and date of birth. (ii) The cancellation for the pending transaction must be received and entered into the system before the cutoff for the day the relevant transaction is submitted for processing in order to be effective to cancel the transaction. (iii) The letter must state unambiguously the specific contribution allocation or interfund transfer request it seeks to cancel. (A) If it does not identify the specific contribution allocation or interfund transfer request it seeks to cancel, the written cancellation will apply to any pending contribution allocation or interfund transfer request with a date (as determined under this paragraph (d)(3)) before the date of the cancellation letter. (B) If the date of a cancellation letter is the same as the date of a pending contribution allocation or an interfund transfer request and the request was made on Form TSP-50 or Form TSP-U-50, the form will be cancelled. (C) If the request was made on the TSP Web site or ThriftLine, it will only be cancelled if the written cancellation specifies the date of the TSP Web site or ThriftLine request to be cancelled. (D) If there is no contribution allocation or interfund transfer pending when the written cancellation is processed by the TSP record keeper, the cancellation will have no effect. Cancellation letters will not be held until a contribution allocation or interfund transfer request is received. [68 FR 35496, June 13, 2003] [[Page 183]]

http://peo7.com/CFRFiles/3694_CFR.Htm

also... http://a257.g.akamaitech.net/7/257/2422/11feb20051500/edocket.access.gpo.gov/cfr_2005/janqtr/pdf/5cfr1601.32.pdf

[fabijo]

I definitely like the analogy of the burgers! :) Makes sense.

And I especially like the reference to the U.S. Code. Very useful indeed.

[FogSailing]

I thank you both for well writtern letters stating important ponts. I also suggest someone send a copy to NARFE.

FS

[Show-me]

Nice job folks!!!

[James48843]

TO: Mike Causey

Total number of participants in TSP: Over 3.7 million
Total amount held by TSP for workers: Over $226 Billion dollars.

Average Administrative Expense ratio in 2000-2005: 6 basis points (0.06%).
Average Expense ratio in 2007- 1 basis point. (0.01%)

Costs are going down, not up with the TSP. Administrative costs of the TSP are one sixth as much as what it did just a couple years ago.

The implementation of TSP Loan fees now generates income for the administration of the TSP to the tune of millions of dollars every year. Those fees were imposed on TSP holders to discourage rapid loan turnover.

Now, you are talking about additional fees to discourage people managing THEIR OWN MONEY, not asking for offsets of true costs, but to impose a punishment to those who choose NOT to follow the Thrift Board's philosophy of saving for retirement.

Let me say this again- if fees are imposed, it's not to make up for any costs, but are being floated as an idea to stop people from moving money around, because that doesn't fit the Thrift Board's philosophy of how WE should manage OUR OWN money. What kind of idea is that?

I read the FEDERAL RETIREMENT THRIFT INVESTMENT BOARD meeting minutes every month, and stay very informed about my retirement money.

There is NO reason to charge “User Fees” to access our own money simply for moving our own money between funds. We, who are continuously educating ourselves to make good decisions for our own financial future, should NEVER have to pay the TSP to hold and move OUR own money.

Do I move funds from time to time? Yes.

Have I been more successful than a simple “buy and hold” strategy? Absolutely yes.

Should they charge fees to move our money between funds?

ABSOLUTELY NOT!

Just say no to TSP User fees.

Signed-

A TSPTALK devotee.

[crhuss]

Here Here!! Great job. I did it with logic, you did it with statistics and logic. I am very impressed. This is really fun!!!

[Foghorn]

I sent an email.

Thanks guys for creating this thread and for posting some samples to use.

Foghorn

[amauldin]

Before I threw my opinion out there on whether or not additional fees would be fair, I'd like to know more about how exactly TSP is run behind the scenes. Exactly how many people are there employed making these transactions, handling paperwork, etc? Have they needed additional people to cope with all our transfers? Has someone ever posted an article or a link with that sort of info in it?

[airlift]

Sky and Tom,

After minimal modifications, I sent the suggested text to Mr. Causey.

[Show-me]

Before I threw my opinion out there on whether or not additional fees would be fair, I'd like to know more about how exactly TSP is run behind the scenes. Exactly how many people are there employed making these transactions, handling paperwork, etc? Have they needed additional people to cope with all our transfers? Has someone ever posted an article or a link with that sort of info in it?

Welcome to the MB! :D

[Aspiration]

I sent one as well. I was part of that original 4-1 group...

[Hendricusl]

Is there anyway to give feedback to the TSP Board directly. Mr. Causey (from what I understand) is just a radio show host. Would we be better off to engage the decision makers directly?

[Aspiration]

Hendricus,

That is a good point that I, too, have been mulling over. SkyPilot provided a mailing address for the board. I've been trying to get off my lazy duff an go write the letter.

Having worked in a part of an agency that handles comments, I have to say we only put weight in comments submitted directly to us. I cannot recall ever weighing comments submitted to non-agency websites...


Asp

[KCinKC]

Bravo SkyPilot!

With your suggested letter, I've added one more line to the end of the letter:

It is un-American and foolish to follow a Socialist pattern where the government controls an individuals retirement, “from cradle to grave,” (first day of employment to retirement day), while an individual is employed by the government.

[12%ayear]

Remember people, TSP can do whatever they want and can careless about our e-mails. Think about it, every time we trade, they have to mail out a confirmation which costs money. Everytime we trade, it changes the books for them and the accounting, that costs huge money. Although, I hope they do not stop trading, however; it would not surprise me. They want to go back to the once a month I heard. TSP's main excuse will be we are not in the trading business but the retirement business.

[USNAVYRETIRED]

Remember people, TSP can do whatever they want and can careless about our e-mails. Think about it, every time we trade, they have to mail out a confirmation which costs money. Everytime we trade, it changes the books for them and the accounting, that costs huge money. Although, I hope they do not stop trading, however; it would not surprise me. They want to go back to the once a month I heard. TSP's main excuse will be we are not in the trading business but the retirement business.

12%... They don't mail out the IFT's if it's done online. We get an email confirmation and I'm sure that's automated, so there should be no additional expense for TSP as long as the IFT's are done online.
Like someone else here on TSPTalk said, most of these people don't know the difference between the G and F fund, so why should they care. They just contribute to their TSP accounts and never even look at it.....

[12%ayear]

12%... They don't mail out the IFT's if it's done online. We get an email confirmation and I'm sure that's automated, so there should be no additional expense for TSP as long as the IFT's are done online.
Like someone else here on TSPTalk said, most of these people don't know the difference between the G and F fund, so why should they care. They just contribute to their TSP accounts and never even look at it.....
There are a ton of people that trade USNAVY and many get confirmations through the mail. Just like TSP changed the loan program, they will change this. I hope I am wrong. TSP hates to do any thing extra I was told. http://washingtontimes.com/article/20070904/NATION06/109040043/1008 In March, roughly 35,000 TSP investors moved about $1.7 billion from the stock index funds — mostly the I Fund — into the Treasury securities or bond funds. TSP officials said they "discourage active trading" because the TSP is a long-term investment

[smine]

I wrote a letter to lobby for later trading times, so we could have a more level playing field; I was of course chastised for suggesting we trade like real people! Imagine how much better we could do for ourselves and TSP if we could make our moves at 2:30pm instead of 2.5 hrs after the market opens!

[SkyPilot]

Remember people, TSP can do whatever they want and can careless about our e-mails. Think about it, every time we trade, they have to mail out a confirmation which costs money. Everytime we trade, it changes the books for them and the accounting, that costs huge money. Although, I hope they do not stop trading, however; it would not surprise me. They want to go back to the once a month I heard. TSP's main excuse will be we are not in the trading business but the retirement business.

That is why it is important to request email confirmations instead :).

The accounting and trades are electronic and automatic, so the expenses are actually minimal and inevitable as the system must run and be maintained used or not.

In addition, the daily rebalancing of the L fund are just another series of IFT's done by TSP for the individual, rather than the individual doing it themselves. Therefore, wether personal IFT's or L fund IFT's, it's essentially the same and equivalent, and if there is an expense incurred by IFT's, we are already being charged for those using the L funds.

To justify charging to do your own IFT rather than opting for the L funds would be difficult, as changing an item in the CFR is not something easily done.

[SkyPilot]

Hendricusl, good idea!

You may also send a letter to:

Federal Retirement Thrift Investment Board
1250 H Street, NW Washington, DC 20005-3952

There does not seem to be an email address available anywhere. Maybe some one else can find one?

Yes, it does make a difference, if they know we are aware and watching!

[airlift]

Could someone please clarify the original rationale or reason for allowing us to do daily IFT's?

My gut tells me that this has much to do with envy making its way into our success! I wish that I am wrong on this point.

For their own motives and short-sighted reasons, some people don't like to see others with more than one shirt!

[SkyPilot]

Before I threw my opinion out there on whether or not additional fees would be fair, I'd like to know more about how exactly TSP is run behind the scenes. Exactly how many people are there employed making these transactions, handling paperwork, etc? Have they needed additional people to cope with all our transfers? Has someone ever posted an article or a link with that sort of info in it?

FRTIB states on their home page that they have a staff of 80. I don't suppose this would include the contracts that TSP has let to handle some of the actual work as well.

I have also read that in response to emergency planning intiatives, they have added server support to handle the traffic that could be generated if there were to be another 9/11 style crisis in which there were a massive IFT to the G fund.

http://www.frtib.gov

[anthony]

I think to some extent our arguments are falling on deaf ears with the Thrift Board and Mr Causey. I will write a letter expressing some concerns, but will direct it to my Congressman and Senator instead (and not without some hope that they are enrolled in TSP as well).

I think the worst part of this is the people who cause it. $1.7B in trades out of stocks in March means thousands of ignorant lemmings dove off the cliff after it was already too late and they should have been holding on for the ride. I can't wait for the 4th Quarter numbers. I could understand better if thousands of educated investors transferred all their G and F Fund shares into stocks to take advantage of a market bottom, but I have to assume that a very small percentage of TSP participants meet that description.

If they started charging fees or returned to the once-a-month transfer limits, I know one certain thing. The day I left the military, I would roll my entire TSP into a self-directed Traditional IRA and I would plot my own course with carefully selected low-expense no-load mutual funds that consistently outperform the market and would include some carefully selected value stocks to boot.

If we were forced into a compromise I think the fee should increase incrementally by trade activity level, while maintaining daily capability. There's usually only ~20 trade days a month right? So for example, the first 0-5 transfers could be free, 6-15 transfers charge 0.01%, and 16-20+ are 0.02% of the transaction value, or something. Don't worry this part won't be in my letter!


p.s. - 12% I'm digging those new socks you're sportin'!

[anthony]

okay, disregard my sample percentages - even 0.01% would be rape. But you get the idea, yeah? ... some incremental approach if we had no other option.

[FogSailing]

I posted a message on Mike Causey's website last night. It was simple..went something like this..

Mr. Causey, I don't agree that federal employees need to pay fees for using the interfund transfer system. My guess is that is you conduct a real poll you'll discover that the majority of us are fine without additional fees.

Regards All,

FS

[12%ayear]

I posted a message on Mike Causey's website last night. It was simple..went something like this..

Mr. Causey, I don't agree that federal employees need to pay fees for using the interfund transfer system. My guess is that is you conduct a real poll you'll discover that the majority of us are fine without additional fees.

Regards All,

FS
Causey has no power over the TSP. It is just his 2 cents like ours. I would not waste my time with responding to him and giving him credit. The guy should just shut-up.

[SkyPilot]

Causey has no power over the TSP. It is just his 2 cents like ours. I would not waste my time with responding to him and giving him credit. The guy should just shut-up.

However, Mr. Causey is the prominent media voice regarding federal employee issues in the single largest federal employee market (Washington D. C.). So, to let his opinions be voiced without challenge is to acquiesce, and opinion left to stand on it's own without being refuted becomes perceived fact.

If we do nothing, we only have ourselves to blame for the outcome. And, if he should look into the issue further and gain understanding, he would not be a bad ally to have.

Politicians are media sensitive...

[wv-girl]

However, Mr. Causey is the prominent media voice regarding federal employee issues in the single largest federal employee market (Washington D. C.). So, to let his opinions be voiced without challenge is to acquiesce, and opinion left to stand on it's own without being refuted becomes perceived fact.

If we do nothing, we only have ourselves to blame for the outcome. And, if he should look into the issue further and gain understanding, he would not be a bad ally to have.

Politicians are media sensitive...


I am sure Mr. Causey has his own agenda...i.e. Headline goes something like this ...."evidence of more waste of time, money etc....by govt workers...hrs spent on ..... much like researching costs of paper clips.....and screw-drivers ...add nauseum". Although it is our $, everyone seems to know best on how we are to spend it.

As for the other tsp gov't folks that have started this mess about fees, etc.... If the L funds re-calculation formulas are done automatically, surely one has to believe the other funds can also be automatic. I am sure that the only thing those folks in Alabama are doing is data entry per fund. They should consult "our experts" on how it can be done via per person per ift.

IMO----Someone at tsp.gov has been put on the hotseat as to having to justify keeping current employees since they run such an efficient program as to have the lowest fees anywhere for their funds. Fed employees have always lagged behind the private sector in pay, etc. and gov't has promised to downsize....yak, yak, yak. Now some of the agencies are doing the 'A-76' studies, or have done, or in process of competing our jobs to outside contractors. At NIH this is like the 4th or 5th year, and each time, no matter what job series is being competed, gov't employees have won the bids. Meaning we are doing more work for the same pay and doing it more efficently for lots less than private sector contractors. But Uncle Sam still wants to waste more $ doing more and more of these 'A76' studies.

Anyway, you get the point. Tsp.gov needs to show and justify the 80 current positions they currently have.

Enough soap box for now.


My 2 cents
Debbie

[jeburnside]

I sent my letter in. IFT fees would kill my profit margin.

Jimmy

[Show-me]

I sent my letter in. IFT fees would kill my profit margin.

Jimmy

Thanx for sending the letter and welcome to the mb. Good luck with your investing! :D

[FundSurfer]

I know I've said this before but I want everyone to understand why the TSP board is concerned about fees. The fees have VERY LITTLE to do with the actual cost of trading stocks and ZERO to to with the current problem. The problem has EVERYTHING to do with the FV.

Large numbers of moves into and out of the I-fund with a poor FV guess either cost a lot of money or makes a lot of money for the TSP Board. This cost can seriously impact their budget.

So far all the board's discussion has focused on the I-fund. I do think that the FV problem with the I-fund needs to be fixed. I do not think that charging for trades is the answer. I know that I personally have lost way more to poor FV guesses than I ever will if I was charged $10 per trade.

Example: $300,000 * FV oops of 0.2% = $600.

52 trades (1 per week) * $10 =$520.

I have lost way more than 0.2% to poor FV guesses by Barclays.

Anyway, I think y'all are perpetuating a myth that the problem is frequent trading due to cost of trading. That is NOT the problem. The problem the board is facing ... which is very real ... is that they have had to cough up a bunch of money to cover I-fund FV's that were not correct. (POOR GUESSES)

This could be fixed by using overnight futures in a snap. Could also be fixed by moving the time that trades are executed from COB to noon.

Is this going over people's heads? Do I need to explain this in a little more detail?

I know Mike Causy doesn't understand. It has gone over his head.

[SkyPilot]

I am concerned that the policy makers and opinion shapers get it and don't lump the IFT concerns in with FV concerns.

[RGP22407]

FUNDSURFER:

I agree with you that this is the "real" problem, but there is no way they could explain it to the average TSP customer, so they are using something sort of "related" that is also an emotional issue that will get them what they want. Costs to change the system will probably be hidden in the new fees.

Ref ur statement "Could also be fixed by moving the time that trades are executed from COB to noon."

Wouldn't they have to move all transaction processing to noon in order to process the I fund transfers -- moving our cutoff in turn?

[SkyPilot]

Another way to compensate for the FV issue might be to establish a TSP buffer account and fund it out of their allowable operating percentage for a year or so.

TSP FV overages could be deposited and insure the negative FV guesses. Overtime the FV guesses reach equilibrium.

Just like most of us probably have a "float" amount in our checkbook, that keeps us from accidentally over-drafting.

Could also be called petty cash :D.

[Birchtree]

A 7 day round trip turnaround time would solve 95% of the fee problem. I bet they'll try the time constraint first before adding fees to the transactions.

[RGP22407]

Another way to compensate for the FV issue might be to establish a TSP buffer account and fund it out of their allowable operating percentage for a year or so.

TSP FV overages could be deposited and insure the negative FV guesses. Overtime the FV guesses reach equilibrium.

Just like most of us probably have a "float" amount in our checkbook, that keeps us from accidentally over-drafting.

Could also be called petty cash :D.

They are doing something to compensate now, but it is most likely re-allocating funds within their appropriation. I'm way out of date with Fed rules and regs, but I think they must comply with the Anti-Deficiency Act and not obligate money they don't have. It might be coming from the funds that pay the contractor (?). I'm not a lawyer nor have I seen their balance sheet.

I don't think logic or reason is going to be a major part of this decision on fees; they are after something to stabilize their operation without regard to the desires of their customers.

[12%ayear]

The bottom-line it is our money and TSP should step back.

[James48843]

http://washingtontimes.com/article/20070904/NATION06/109040043/1008 In March, roughly 35,000 TSP investors moved about $1.7 billion from the stock index funds — mostly the I Fund — into the Treasury securities or bond funds. TSP officials said they "discourage active trading" because the TSP is a long-term investment

I am going to say this ONE TIME. And I want EVERYBODY to understand what I am about to say- and think about it. Hard.

Here goes:

FACT #1:
In March, (*that's the entire 31 days of March) roughly 35,000 investors moved $1.7 billion dollars out of "I" fund.

Now- that's 35,000, out of 3,700,000 investors who are in the TSP.

LESS THAN 1% of INVESTORS. Do you understand that? Less than 1% of people moved $1.7 billion. OUT OF $229 BILLION. That's less than 1% of the investment funds, OVER A WHOLE MONTH. LESS THAN 1% of INVESTORS MOVED LESS THAN 1% OF THE MONEY. AND IT COST THE TSP BOARD, --AND YOUR FELLOW INVRESTORS-- ALMOST NOTHING TO DO THAT.


FACT#2:

EVERYONE- Understand that the TSP MADE 59 million dollars last year from Loan fees, and had a TOTAL expense of administration of around 73 million. So we are talking about it costing just 14 million dollars (above the Loan fees) to run the entire TSP system. That includes the costs to receive money, buy stocks, maintain accounts, run the call center, staff the DC office, handle distributions of funds, make loans, record court orders, Etc. Etc. Etc.

That is UNHEARD OF FOR LOW COSTS.


If the TSP Board wants to charge fees to move funds, it has NO RELATION TO THE COSTS. None. Nada.

It has EVERYTHING to do with people THINKING ON THEIR OWN--not following what the current head of the TSP board THINKS is the way people should handle their money.

He thinks they should only buy and hold. Period.

So if he wants to impose fees, THE ONLY REASON IS TO DISCOURAGE PEOPLE FROM HANDLING THEIR OWN MONEY.


Now- there. I've said it.

Think about that for a while.

You ought to be mad as heck at ANYONE who even MENTIONS that there should be fees for interfund transfers.

USE FACTS-

TELL PEOPLE .... Get your co-workers informed with FACTS.

NNNNNOOOO! TO USER FEES.

CALL YOUR CONGRESSMAN, GIVE HIM/HER the FACTS.

And say NO TO USER FEES.

[camper65]

Far from perfect
I would agree to requiring fees for ITFs only if TSP service be vastly improved!
While I see TPS as a good system for creating substantial retirement accounts, lets not forget it is far from perfect! I did some trading in the private sector, Ameritrade to be exact, and while I can tell you that it wasn’t the best of my endeavors, (I simply do not have the instincts required) it did enlighten me to the short comings of the TSP system.
With Ameritrade the transactions were instantaneous, to buy or sell stocks took only seconds. I fail to see why we are restricted to a system that requires hours to perform transactions while private industry can do it in seconds!
And what about our choices? I would not call five funds to pick from as having numerous choices! (Opps! Forget the L funds! I rather make my own mistakes!) There is a great deal of option available that we simply do not have.
What I would suggest is that two systems be developed, One sys. As we have it now, FEE FREE!!!!
The other modeled after private industry, with instant ITFs and more choices.
The system, as it stands now is free, and does not justify the imposition of FEES!!!
Allen:suspicious:

[Birchtree]

James is absolutely correct on this issue. It simply boils down to the Donkey concept of multiculturalism. Multiculturalism is really an updated version of radical egalitarianism which seeks to eliminate all standards and aspirations in order to reduce everyone and everything to the same level. From an ideological standpoint, multiculturalism is but a thinly veiled attack on the central principles and ideas of Western civilization. Why should those 35,000 individuals be allowed to be different and make their own decisions. These issues and principles have given us the greatest prosperity, the highest standard of living and, more important, the greatest individual freedom ever known to man. You are right to fear the Donkey my friends. Why won't the Donkey allow us the opportunity to manage 4% of our own social security - it's because we ain't smart or responsible enough. Just look at the subprime mess. I'll gladly pin the ice pick on the Donkey's tail.

[GuilRL]

Here's what I perceive to be the situation.

Outsiders with an interest for their own profit, or motivation for their own profit, are looking at the huge amounts in our TSP coffers and just can't wait to get their hands on our money. As a result, they are promoting lies of deception to instigate an issue which does not exist, to try to cajole the ignorant majority among us to agree to fee trades that should not be started. What is apparent is that those trying to question whether TSP trades should be fee'd or not are outsiders. I believe that these outsiders are delving in matters relating to defined benefits we as Federal Employees have, and if we let them have their way we will lose these benefits.

I think that Congress and we as benefactors of our well deserved and well earned defined benefits should give these outsiders what they deserve --- an emphatic NO! Further, we need to be mindful that thieves and profiteers are trying to instigate issues only because they will benefit from us, like leeches.

We need to make it clear to all outsiders that do not contribute to the TSP funds that they do not pay for what we pay to have our benefits continue, and that they should get out of our kitchen and stay out of matters they have not right to be in, or even a right to express an opinion on.

[grandma]

QUESTION: Is this article all true, partially true, or just plain slanted?Or is it even pertinent to the question at hand? Underlines, italics, etc, are mine. I don't want to pay a fee, but if they could move the closing time to the same as the fee-based brokers, that may not be too disconcerting...??

Retirement Plan Lucked Out the Day After Markets Fell

By Stephen Barr
Thursday, April 19, 2007

It was a lucky day at the Thrift Savings Plan.

On March 5, the overseas markets were falling, and worried federal
employees filed orders to sell shares they held in the international
stock index fund, known as the I Fund, at the TSP.

In the biggest transaction ever for the I Fund, the employees liquidated
stock valued at $865 million.

The Asian and European markets were closed when the TSP sent the sell
orders to the fund manager in San Francisco at 2 p.m. Eastern time, the
standard practice. But overnight, the U.S. stock market looked brighter,
and the overseas markets opened strongly.

The I Fund shares sold on March 6 were up a percentage point, not down
as expected, and reaped $8 million in trading credits. By the time the
books were settled, the $8 million earned that day erased almost all of
the fund's year-to-date trading costs.

"We got very fortunate," said Tracey A. Ray, the TSP's chief investment
officer.

Normally when selling stocks, the TSP absorbs commissions, price
differences and other transaction costs. All holders of I Fund accounts
pay for the trading costs, even if they did not sell or buy. To give a
sense of the stakes involved in such transactions, Ray noted that the I
Fund had trading costs of $13 million in 2006.

The $8 million credit last month "could have easily gone the other way"
and could have been "money out the window," she said.

The TSP does not restrict government employees' rights to sell and buy
stocks and bonds offered in their retirement program, but officials
clearly wish they could educate more employees that overreacting to
market changes can be risky and that investors come out ahead when they buy and hold for the long term.

Although the I Fund hit a low March 5, it is up 11.3 percent since then
-- and as a result, employees getting back into the I Fund in recent
weeks ended up paying higher prices that could have been avoided if they
had decided to stand pat.

The churning in the I Fund was substantial. Ray said TSP participants
pulled $1.5 billion out of the fund in the first three days of March,
then transferred $1.2 billion into the fund over the rest of the month.
A record 268,213 interfund transfers -- in which employees moved money
from one fund to another in the TSP -- were recorded in March, she said.

Ray described the I Fund trading flurry at this week's meeting of the
Federal Retirement Thrift Investment Board, which oversees the TSP. Her
report prompted board Chairman Andrew M. Saul to express concern that
TSP computer systems could be significantly stressed if a catastrophic
or dramatic swing in world stock markets led federal employees to sell
parts of their portfolios.

TSP officials said they are drawing up plans on how to handle a
stressful event and ensure that the agency's computers can carry out
trades. The TSP has switched from a monthly to a daily valuation system
since the last major disruption to the stock markets -- the Sept. 11,
2001, terrorist attacks.

Saul also urged TSP officials to focus on the growth of the TSP --
assets increased by about $10 billion in the most recent quarter -- and
ensure that its computer systems and offerings keep pace with the
program's expanding size.

At the end of March, the TSP had more than $213 billion in assets and
more than 3.73 million participants.

[fabijo]

QUESTION: Is this article all true, partially true, or just plain slanted?Or is it even pertinent to the question at hand? Underlines, italics, etc, are mine. I don't want to pay a fee, but if they could move the closing time to the same as the fee-based brokers, that may not be too disconcerting...??

As far as I know, everything in that article is true. The only slant I can see is how they made it sound like the trading costs are huge. If you ever read the FRTIB meeting minutes, you'll see that the trend in costs is that the fees are getting less and less of a percentage of each fund. Right now, the fees are really unnoticed because it is calculated into the price of each fund on a daily basis. The article fails to mention anything about the almost unnoticeable fees by just giving big numbers and ignoring the small fraction those numbers represent.

[FundSurfer]

I am going to say this ONE TIME. And I want EVERYBODY to understand what I am about to say- and think about it. Hard.

Here goes:

FACT #1:
In March, (*that's the entire 31 days of March) roughly 35,000 investors moved $1.7 billion dollars out of "I" fund.

Now- that's 35,000, out of 3,700,000 investors who are in the TSP.

LESS THAN 1% of INVESTORS. Do you understand that? Less than 1% of people moved $1.7 billion. OUT OF $229 BILLION. That's less than 1% of the investment funds, OVER A WHOLE MONTH. LESS THAN 1% of INVESTORS MOVED LESS THAN 1% OF THE MONEY. AND IT COST THE TSP BOARD, --AND YOUR FELLOW INVRESTORS-- ALMOST NOTHING TO DO THAT.


FACT#2:

EVERYONE- Understand that the TSP MADE 59 million dollars last year from Loan fees, and had a TOTAL expense of administration of around 73 million. So we are talking about it costing just 14 million dollars (above the Loan fees) to run the entire TSP system. That includes the costs to receive money, buy stocks, maintain accounts, run the call center, staff the DC office, handle distributions of funds, make loans, record court orders, Etc. Etc. Etc.

That is UNHEARD OF FOR LOW COSTS.


If the TSP Board wants to charge fees to move funds, it has NO RELATION TO THE COSTS. None. Nada.

It has EVERYTHING to do with people THINKING ON THEIR OWN--not following what the current head of the TSP board THINKS is the way people should handle their money.

He thinks they should only buy and hold. Period.

So if he wants to impose fees, THE ONLY REASON IS TO DISCOURAGE PEOPLE FROM HANDLING THEIR OWN MONEY.


Now- there. I've said it.

Think about that for a while.

You ought to be mad as heck at ANYONE who even MENTIONS that there should be fees for interfund transfers.

USE FACTS-

TELL PEOPLE .... Get your co-workers informed with FACTS.

NNNNNOOOO! TO USER FEES.

CALL YOUR CONGRESSMAN, GIVE HIM/HER the FACTS.

And say NO TO USER FEES.

BRAVO James. Could not have said it better myself.

[grandma]

BRAVO James. Could not have said it better myself.
Thank you, FS, for redirecting my attention to James' earlier post -
Thank you, James, for the well-laid-out information!

[BeaverState]

I'm still not convinced there is any transaction fee whatsover for each individual account. It's all done electronically. How do we know they are not paying a set fee?

[budnipper1]

I'm still not convinced there is any transaction fee whatsover for each individual account. It's all done electronically. How do we know they are not paying a set fee?
We ARE already paying fees. Each fund had $0.30 per ($1,000 account balance) charged in administrative expenses in 2006. You can find that at: http://www.tsp.gov/rates/fundsheet-cfund.pdf (http://www.tsp.gov/rates/fundsheet-cfund.pdf) .

If that seems "insignificant", here's the math, based on the Fund sheets as of December, 2006:

G fund assets totaled $74.9 billion
F = $11.4 billion
C = $78.8 billion
S = $17.9 billion
I = $23.6 billion
L funds totaled $16.9 billion

Grand Total = $223.5 billion

Admin expense = 30 cents per $1,000 balance
$223.5 billion divided by 1,000 = $223.5 million
$0.30 X $223.5 million = $67,050,000 ($67.05 million)

Using the C Fund sheet as the example, the returns for this fund is shown as 11.86%, (since inception). The corresponding returns for the S&P 500 Index is 12.16%. This .3% difference is where they got the admin fees.

[swsop]

TSP board backs budget hike for tech upgrade
By Amelia Gruber September 17, 2007

From Govexec

The board overseeing the federal employee Thrift Savings Plan on Monday backed a 24 percent increase in the 401(k)-style program's budget for fiscal 2008, largely to support a massive project to modernize systems for processing transactions.
Board members approved a budget of $108.4 million for the fiscal year that starts Oct. 1, marking an increase of $20.8 million over the $87.6 million approved for fiscal 2007. The TSP's budget has declined in recent years even as assets have grown to more than $224 billion. But plan officials told board members that investments in new technology are necessary to ensure the program is secure and capable of weathering events ranging from a plunge in the market to a terrorist attack or natural disaster.
"This in my view represents a budget that makes sense," said TSP Executive Director Gregory Long. "It's prudent, and it represents the interests of participants."

Mark Hagerty, the plan's chief information officer, stressed that the current technology has performed well in terms of handling influxes of transactions and meeting trading deadlines. But he recommended that officials "skate ahead of the puck" by making upgrades before they become more urgent.
Reviews of the TSP's current technological capacities indicate that most of the plan's computing platforms are at or near the end of their life cycles, Hagerty said. Also, some systems are not adequately backed up, and certain inefficiencies need to be addressed, he said.

He proposed a solution that would take about two years and require about $15 million in capital investments. The plan would involve replacing mainframe computers with newer technology offering more memory and faster processors, consolidating and replacing servers, modernizing IT networks and improving storage capacity.

The upgrades will have such benefits as allowing the encryption of data "at rest" in servers and enabling a mandatory switch to the next generation of the Internet, known as Internet Protocol version 6, Hagerty said. The modernization also is expected to help decrease the time needed to transfer operations should a system fail.

The bulk of the cost will be felt in fiscal 2008, Long said. But costs will not decrease as much as might be anticipated the next year because hardware and software maintenance fees will increase after the first year.
TSP officials projected that the plan's overall budget will go down slightly in fiscal 2009, falling by $1.3 million from fiscal 2008 to $107.1 million.
Other projects on tap for the next fiscal year include a redesign of TSP's Web site. The changes should be complete within a year, Long said.
Plan officials already are implementing steps to make that site more secure. Participants will receive new account numbers by Oct. 1. Currently, the system uses Social Security numbers to identify accounts. The change has turned out to be labor intensive, with calls already coming in from concerned participants, plan officials said. Long said he expects continued pushback from some participants reluctant to have an extra number to learn. But he emphasized the necessity of the change.

swsop

[amauldin]

But he recommended that officials "skate ahead of the puck"

That's a new one for me. Anything like "the cart before the horse"?

:suspicious:

[offtrack]

http://www.fedsmith.com/articles/articles.showarticle.db.php?intArticleID=1367

Trading TSP Funds: Should There Be a Fee When Investors Trade?

9/17/2007
Our recent survey (http://www.fedsmith.com/articles/articles.showarticle.db.php?intArticleID=1357) on the charging of fees for interfund transfers generated considerable interest among readers with a higher response rate and more opinions sent in than any previous survey we have run.

[KCinKC]

Dang Offtrack!

I didn't want to get a headache about another attak on IFTs this morning!
:(

But, I shouldn't be an ostrich and have my head in the sand regarding these attacks on those of us who want to frequently move our TSP funds.

[Wasaki]

Our recent survey (http://www.fedsmith.com/articles/articles.showarticle.db.php?intArticleID=1357)

Here is my response after reading most of the comments:

Before you make anymore posts about this subject make sure you know what you are talking about. If you don't know the following do some reading first:

1. What IFT stands for
2. Difference between Day Trading and Market Timing
3. Admin expense fees ALREADY being paid by everyone per $1,000 regardless of any trading
4. How the L funds work
5. What I Fund Fair Valuation (FV) is
6. The percentage of those who are considered frequent traders and the percentage impact they create (minimal)

I'm sure i'm leaving some out. If you can't answer even one of these then take some time to educate yourself. I suggest going here: www.tsptalk.com and you will learn a lot and may change your opinion on imposing fees on trades. After reading all the comments on fedsmith, it seems the ones who think fees should be imposed are the least educated on the TSP retirement system.

[Ed the Fed]

It seems to me that IF someone wants to charge me a fee per transaction then I should be entitled to make my IFT right up to the closing bell. Since we are currently locked out at noon, that hardly qualifies as day trading. How often has the market done a 180 after the noon deadline leaving us with that hopeless feeling of dread knowing the overseas market will tank that night and further tanking by the US market the next day. Day trading?? Hardly! If you don't pull the trigger at noon, you are locked in for another day and a half in whatever fund(s) you are in.

I would be willing to accept a fee if it gives me the ability to do an IFT by 3:45pm. Maybe they should make it a free transaction before noon, charge a fee after noon until market close. I suspect many of us would elect to make our moves near the closing bell and incur the fee!

[SkyPilot]

Here is my response after reading most of the comments:

Before you make anymore posts about this subject make sure you know what you are talking about. If you don't know the following do some reading first:

1. What IFT stands for
2. Difference between Day Trading and Market Timing
3. Admin expense fees ALREADY being paid by everyone per $1,000 regardless of any trading
4. How the L funds work
5. What I Fund Fair Valuation (FV) is
6. The percentage of those who are considered frequent traders and the percentage impact they create (minimal)

I'm sure i'm leaving some out. If you can't answer even one of these then take some time to educate yourself. I suggest going here: www.tsptalk.com (http://www.tsptalk.com) and you will learn a lot and may change your opinion on imposing fees on trades. After reading all the comments on fedsmith, it seems the ones who think fees should be imposed are the least educated on the TSP retirement system.

Whoa, Wasaki...

All are welcome to post in this thread, no matter what your level of understanding. This is for the purposes of education, discussion and activism. When we come to the place where we all have complete understanding, then I guess none of us will need to post anything.

Please express all your opinions, pro or con. It's the way we learn :o.

[Wasaki]

Whoa, Wasaki...

All are welcome to post in this thread, no matter what your level of understanding. This is for the purposes of education, discussion and activism. When we come to the place where we all have complete understanding, then I guess none of us will need to post anything.

Please express all your opinions, pro or con. It's the way we learn :o.

That was my response on fedsmith to the survey on TSP fees which offtrack shared with everyone . That isn't in response to anyone on here. Sorry if that wasn't clear in the post, I'll go back and edit it

[SkyPilot]

That was my response on fedsmith to the survey on TSP fees which offtrack shared with everyone . That isn't in response to anyone on here. Sorry if that wasn't clear in the post, I'll go back and edit it

That's cool! Those remarks are definately appropriate for FedSmith!!! :)

Well Done!

[BeaverState]

I was listening to some financial guru (I believe his name was Edelman??) on the radio this weekend and he said the L-funds stands for Loser Funds. His point was the bond portion of the funds really reduces your returns over time.

[Birchtree]

Now that I have to agree with. Bonds stink.

[Ed the Fed]

I also gives a thumbs down to the bonds being part of the L funds. If it wasn't for that, I might actually invest in the L funds to diversify my portfolio. Any decent financial management company wouldn't be investing in bonds unless the interest rates are dropping. We may be going that way in the coming months but that sure hasn't happened since the inception of the L funds.

[SkyPilot]

The FAQ regarding Fair Valuation has been modified... note the date! See the bold text added in the body of the article!:eek:

TSP: FAQs, Ch#4, Rates & Share Prices; 2007-09-14
... C Fund. The percentage of change in the value of the S&P 500 index from the ... site at www.mscidata.com (http://www.mscidata.com). The EAFE index value for the previous business day is updated on ... the preliminary estimate of the closing EAFE index value for the previous business day. The actual closing ... of the foreign markets. This process, known as "fair valuation" or "fair value pricing" occurs when there are large ...
http://www.tsp.gov/faq/faq4.html
Rank: 1000 Size: 16418k Modified:


6. Why doesn't the change in the I Fund share price always correspond to the EAFE Index which it tracks? http://www.tsp.gov/resources/top.gif (http://www.tsp.gov/faq/faq4.html#top)
Participants have asked why, on some days, the change in the I Fund share price reported by the TSP does not match the change reported for the Morgan Stanley EAFE (Europe, Australasia, Far East) index, which the I Fund tracks. This happens when the Board's investment manager, Barclays Global Investors (BGI) reprices its EAFE Equity Index Fund, in which the TSP invests, after the close of the foreign markets. This process, known as "fair valuation" or "fair value pricing" occurs when there are large U.S. market or currency movements between the time the foreign markets close and 4:00 p.m. eastern time, when BGI's share prices are determined.

Fair value pricing is used by mutual funds when there is a gap between the time the index closes and the time the fund is priced to reflect the index. Fair value pricing was implemented to protect long-term shareholders from short-term traders attempting to profit from price difference between the index's closing price and the price of the fund before it was repriced. While it causes some variation in daily pricing, the variation is generally reversed the next day.
Fair value pricing in the TSP's I Fund occurs less than 20% of the time. The TSP is meant to be a long-term retirement savings account, not a short term trading vehicle. Mutual funds use fair value, redemption fees, and limits on numbers of trades to prevent market timing activity and the resulting excessive trading costs from hurting the performance of the fund. To date, the TSP has chosen to use only fair value pricing, but that may change in the future.
Fair valuation ensures that traders cannot "market time" the I Fund by making investment decisions based on the "stale" prices, thus diluting the returns of other participants who invest in the I Fund. Because the EAFE uses the foreign market closing prices to calculate its values, its price change will differ from the TSP's on those days.

[oreo]

JMHO, but I'm betting this "change" will probably be included in order to pay for their multi-million dollar "upgrade". :suspicious:

[Hallatauer]

I am confused as to where Mr Causey even got his Fed employees would welcome a IFT fee. That's like saying I want my bank to charge me ATM fees. uuhhhh...... what???

The administrative costs are close to nil so I view this as a tax to discourage IFT's. Odd that a republican administration would want to impose fees after trying to open SS accounts to investing. Very contradictory.

If they need to imose a fee to cover costs of IFT's then come out with what the cost is. Also include what it costs to constantly rebalance the L Funds and charge a fee for those invested in the L Funds for those transactions also.

</rant off>

[mkita73]

That is why it is important to request email confirmations instead :).

The accounting and trades are electronic and automatic, so the expenses are actually minimal and inevitable as the system must run and be maintained used or not.

In addition, the daily rebalancing of the L fund are just another series of IFT's done by TSP for the individual, rather than the individual doing it themselves. Therefore, wether personal IFT's or L fund IFT's, it's essentially the same and equivalent, and if there is an expense incurred by IFT's, we are already being charged for those using the L funds.

To justify charging to do your own IFT rather than opting for the L funds would be difficult, as changing an item in the CFR is not something easily done.

I concur... all of my transactions/confirmations are automated and I wonder the justification for such an idea.

[James48843]

Here's what I perceive to be the situation.

Outsiders with an interest for their own profit, or motivation for their own profit, are looking at the huge amounts in our TSP coffers and just can't wait to get their hands on our money. As a result, they are promoting lies of deception to instigate an issue which does not exist, to try to cajole the ignorant majority among us to agree to fee trades that should not be started. What is apparent is that those trying to question whether TSP trades should be fee'd or not are outsiders. I believe that these outsiders are delving in matters relating to defined benefits we as Federal Employees have, and if we let them have their way we will lose these benefits.

I think that Congress and we as benefactors of our well deserved and well earned defined benefits should give these outsiders what they deserve --- an emphatic NO! Further, we need to be mindful that thieves and profiteers are trying to instigate issues only because they will benefit from us, like leeches.

We need to make it clear to all outsiders that do not contribute to the TSP funds that they do not pay for what we pay to have our benefits continue, and that they should get out of our kitchen and stay out of matters they have not right to be in, or even a right to express an opinion on.


BINGO

[airlift]

http://www.tsptalk.com/mb/images/icons/icon1.gif Re: What YOU can do to fight back - IFT limit
Guys,

Below I quoted Jones' letter which I consider important to stop or at least slow down the intended mandatory curtailment of IFT's. I haven't seen much enthusiasm expressed with Jones' actions but I think it is a practical solution based on the current requirements. Please read and act upon it!

P.S. I also adopted the text with my signature and sent an email to DavidlRostker@omb.eop.gov with the written comments contained in the letter.


Quote:
Originally Posted by JonesH2O http://www.tsptalk.com/mb/images/buttons/viewpost.gif (http://www.tsptalk.com/mb/showthread.php?p=140000#post140000)
I just faxed and mailed the following. I borrowed some from folks who provided comments earlier in this thread (thank you) and added a few more of my own.

Dear Mr. Emswiler,

These comments refer to the Interim rule published in the Federal Register on December 27, 2007 (72 FR 73251).

ADMINISTRATIVE PROCEDURE ACT

Pursuant to 5 U.S.C. 553(b), a general notice of proposed rule making shall be published in the Federal Register. This subsection does not apply when the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefore in the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest. The reasons listed in the preamble of this action do not show good cause for an Interim rule or emergency action. Therefore, this action is not exempt from the requirements of the Administrative Procedure Act.

Pursuant to 5 U.S.C. 553(d)(3), after notice required by this section, the agency shall give interested persons an opportunity to participate in the rule making through submission of written data, views, or arguments with or without opportunity for oral presentation. After consideration of the relevant matter presented, the agency shall incorporate in the rules adopted a concise general statement of their basis and purpose. This action does not give the public an opportunity to participate in any future rule making; one that presents a public record of comments and agency responses that are submitted with this action.

REGULATORY FLEXIBILITY ACT

This action states in the Classification section: I certify that these regulations will not have a significant economic impact on a substantial number of small entities. They will affect only employees of the Federal Government. Employees of the Federal Government are not small businesses or small organizations, so they can be certified as not having a significant economic impact. However, retiree's of the Federal Government, former federal employees (who have chosen to keep their money in the TSP) and small business who provide investment counseling to TSP shareholders are small entities and small business entities under the Regulatory Flexibility Act. Therefore, this action will have a significant economic impact on those entities.

PAPERWORK REDUCTION ACT

This action states in the Classification section: I certify that these regulations do not require additional reporting under the criteria of the Paperwork Reduction Act. Pursuant to 5 CFR Ch. III Part 1320.3 Definitions - For the purposes of this definition of ‘‘ten or more persons,'' ‘‘persons'' does not include employees of the respondent acting within the scope of their employment, contractors engaged by a respondent for the purpose of complying with the collection of information, or current employees of the Federal government (including military reservists and members of the National Guard while on active duty) when acting within the scope of their employment. Therefore, retirees of the Federal Government and former federal employees, are not exempt from Paperwork Reduction Act.

Currently, § 1601.22 of the TSP regulations state participants may make an interfund transfer using the TSP Web site or the ThriftLine, or by completing and filing (mailing) the appropriate paper TSP form. The action would change the current voluntary method of requesting an interfund transfer, to a mandatory requirement to request interfund transfers by mail. Paperwork Reduction Act rules are clear on voluntary vs. mandatory requirements: Conversion from voluntary to mandatory information collection would be considered a substantive modification of the existing requirement, even though the number of responses and burden hours may not change. Therefore, this action is not exempt from the requirements of the Paperwork Reduction Act.

For the above reasons, I request that the Interim Rule be withdrawn. Thank you for the opportunity to comment on this action.

Sincerely,


http://www.tsptalk.com/mb/images/misc/progress.gif

[hessian]

Airlift,
I just fired off the same letter as yours (to DavidlRostker@omb.eop.gov), also signed, only making I addition to yours, adding: "...unnecessary, contrary to the public interest, nor is this within the original, stated intent of the TSP as being a savings and investment Plan.

(At this point I figure that more voices can only help the cause.)
VR
God bless James, and may He bless us all that have worked so hard at this!

[hessian]

Airlift,
Got anybody else I can email this letter to... ??

-----Original Message-----
From: postmaster@eopds.eop.gov [mailto:postmaster@eopds.eop.gov (postmaster@eopds.eop.gov)]
Sent: Monday, December 31, 2007 7:52
To: [me]
Subject: Delivery Status Notification (Failure)
This is an automatically generated Delivery Status Notification.
Delivery to the following recipients failed.
DavidlRostker@omb.eop.gov

[airlift]

Hessian,

I do not have any other address. Guys, it seems that Mr. David Rostker of OMB has given instructions to reject some of our incoming e-mail.

I can assure you that I was able to receive a return receipt, but Hessian coul not. Below you can see the automatic return receipt I got last Saturday:


"The original message was received at Sat, 29 Dec 2007 10:47:46 GMT from smtp.vzwmail.net [66.174.76.25]

----- The following addresses had successful delivery notifications ----- <David_Rostker@omb.eop.gov (David_Rostker@omb.eop.gov)> (relayed to non-DSN-aware mailer)

----- Transcript of session follows ----- <David_Rostker@omb.eop.gov (David_Rostker@omb.eop.gov)>... relayed; expect no further notifications"


Does anyone else have a clue why, or to the intentions of not allowing an electronic return receipt?

[kemorris]

Here are the comment I got from one of my letters.
__________________________________________________ _______________________________
Thank you for sending me your comments about the proposal by the Federal Retirement Thrift Investment Board (FRTIB) to reimpose limits on the numbers of free interfund transfers within the Thrift Savings Plan (TSP). I received comments from many people and am sending this one message to all since I will not be able to reply to each one individually.
Some of the people sending messages were under the impression that the Employees Thrift Advisory Council (ETAC) on which I serve has approval authority over proposals made by the FRTIB. That is not the case. As the name indicates, the ETAC members provide advice to the FRTIB and its Executive Director, Greg Long. At the ETAC meeting held Wednesday, December 19, 2007, the members discussed the proposals for limiting interfund transfers within the TSP after receiving a briefing by Tracey Ray, Chief Investment Officer, FRTIB.
Executive Director Long reminded the ETAC members that the FRTIB had not yet issued a formal proposal, that after publication of the proposal in the Federal register, possibly in January 2008, interested parties would have 30 days in which to submit comments. After considering the comments, the FRTIB would decide what action to take.
One of the pieces of information provided by Ms. Ray impressed me greatly. She reported that on Friday, October 19, 2007, about $271 million was transferred into the I-Fund by 2018 participants. On the following October 24, 2007, $291 million was transferred out by those participants. Thus they had a total profit of about $20 million in those five days. On the average, those 2018 participants had about $10,000 in profits at no cost to themselves. The transaction costs were borne by the other 3.8 million TSP account holders.
I reported on the ETAC meeting by email to Carol Bonosaro, President of the Senior Executives Association, shortly afterward. I expressed my concern about a different kind of trading scenario that would be very costly to the TSP. If participants in the I-fund withdrew a large amount before 4 pm on a Friday, a time after the international markets are closed, and some unexpected event occurred over the weekend to cause a large drop in international stock markets, the TSP would take a large loss in assets, not just a transaction cost. You can use your imagination about the diversity of possible events that could cause a large drop in international stock markets over a weekend.
Whether you oppose or support the idea of limiting interfund transfers in the TSP, I urge you to take the opportunity to send your comments on whatever specific proposal comes from the FRTIB.
Happy New Year.
Dick Strombotne
ETAC member
SEA nominee
__________________________________________________ _______________________________

[Show-me]

Thanks for the info. I just check my e-mail and got the exact same response.

[350zCommTech]

Here are the comment I got from one of my letters.
__________________________________________________ _______________________________

One of the pieces of information provided by Ms. Ray impressed me greatly. She reported that on Friday, October 19, 2007, about $271 million was transferred into the I-Fund by 2018 participants. On the following October 24, 2007, $291 million was transferred out by those participants. Thus they had a total profit of about $20 million in those five days. On the average, those 2018 participants had about $10,000 in profits at no cost to themselves. The transaction costs were borne by the other 3.8 million TSP account holders.

Happy New Year.
Dick Strombotne
ETAC member
SEA nominee
__________________________________________________ _______________________________

What a bunch of IDIOTS! 10/19 was a huge down day that marked a temporary bottom, which included a -22 cents FV. The market rallied the following week. Everybody that was in the market that week made money, not just the 2018 traders. How dare we try to enhance our retirement fund? I can't stand stupid people sitting in a position of power.

[Rod]

What a bunch of IDIOTS! 10/19 was a huge down day that marked a temporary bottom, which included a -22 cents FV. The market rallied the following week. Everybody that was in the market that week made money, not just the 2018 traders. How dare we try to enhance our retirement fund? I can't stand stupid people sitting in a position of power.

How about writing her and setting her in her place??? :)

[tsptalk]

One of the pieces of information provided by Ms. Ray impressed me greatly. She reported that on Friday, October 19, 2007, about $271 million was transferred into the I-Fund by 2018 participants. On the following October 24, 2007, $291 million was transferred out by those participants. Thus they had a total profit of about $20 million in those five days. On the average, those 2018 participants had about $10,000 in profits at no cost to themselves. The transaction costs were borne by the other 3.8 million TSP account holders.

Happy New Year.
Dick Strombotne
ETAC member
SEA nominee
Here James' perfect response to that excuse... http://tspshareholder.org/newsletters/Vol2_No2.html

[oreo]

Here are the comment I got from one of my letters.
__________________________________________________ _______________________________
Thank you for sending me your comments about the proposal by the Federal Retirement Thrift Investment Board (FRTIB) to reimpose limits on the numbers of free interfund transfers within the Thrift Savings Plan (TSP). I received comments from many people and am sending this one message to all since I will not be able to reply to each one individually.
Some of the people sending messages were under the impression that the Employees Thrift Advisory Council (ETAC) on which I serve has approval authority over proposals made by the FRTIB. That is not the case. As the name indicates, the ETAC members provide advice to the FRTIB and its Executive Director, Greg Long. At the ETAC meeting held Wednesday, December 19, 2007, the members discussed the proposals for limiting interfund transfers within the TSP after receiving a briefing by Tracey Ray, Chief Investment Officer, FRTIB.
Executive Director Long reminded the ETAC members that the FRTIB had not yet issued a formal proposal, that after publication of the proposal in the Federal register, possibly in January 2008, interested parties would have 30 days in which to submit comments. After considering the comments, the FRTIB would decide what action to take.
One of the pieces of information provided by Ms. Ray impressed me greatly. She reported that on Friday, October 19, 2007, about $271 million was transferred into the I-Fund by 2018 participants. On the following October 24, 2007, $291 million was transferred out by those participants. Thus they had a total profit of about $20 million in those five days. On the average, those 2018 participants had about $10,000 in profits at no cost to themselves. The transaction costs were borne by the other 3.8 million TSP account holders.
I reported on the ETAC meeting by email to Carol Bonosaro, President of the Senior Executives Association, shortly afterward. I expressed my concern about a different kind of trading scenario that would be very costly to the TSP. If participants in the I-fund withdrew a large amount before 4 pm on a Friday, a time after the international markets are closed, and some unexpected event occurred over the weekend to cause a large drop in international stock markets, the TSP would take a large loss in assets, not just a transaction cost. You can use your imagination about the diversity of possible events that could cause a large drop in international stock markets over a weekend.
Whether you oppose or support the idea of limiting interfund transfers in the TSP, I urge you to take the opportunity to send your comments on whatever specific proposal comes from the FRTIB.
Happy New Year.
Dick Strombotne
ETAC member
SEA nominee
__________________________________________________ _______________________________

What is an "SEA nominee"? Would this affect his point of view on whether he wants to make waves or not?

[James48843]

What is an "SEA nominee"? Would this affect his point of view on whether he wants to make waves or not?


SEA nominee= Senior Executive Association.

He is the SINGLE person who is on the ETAC to represent all of the Senior Executives now serving in our United States Government.

Scarey, isn't it?

"Dick" in fact isn't a current Senior Executive at all. He's a retiree, who happens to be head of the Gaithersberg, Maryland chpater of the National Active and Retired Federal Employees Association.

http://www.mdnarfe.org/


At least I'll give him credit for responding. None of the other ETAC members I've written have responded yet.

[hessian]

Hi James,
You may know ALL this already, but FYI, just to ensure our best foot is forwaard... I've worked in DC for 15 years. In past, I've twice weekly, briefed DASNs, rubbed noses many times with SES'ers, once briefed the #2 in USMC, and once The 5-star ops Admiral at PACFLT.
My point is this: folks at this level, only catch "sound-bites". You gotta' put everything into "sound-bites, or it just passes right-on-by them!

Like I said , you probably aready know all this, but just to ensure our best foot is forward, best suggestion I can give is: To put the "conclusions" right-up-front (that we need to make). Make those "conclusions" as "bullets," - if they need more -they will then ask - then have those backup responses "at-ready," as facts, that prove our point(s).

The website should do this too - just in case they go there for further info.
VR ;)
VR

[Boygo]

This may be naive of me, but could the transfer fee problem be alleviated if the tsp limits daily transfers only to the L Funds? Here's my (naive) rationale: since they readjust the percentages of G F C S and I in each of these L funds on a daily basis, significant dollar amounts are being shuffled around anyway. Why not let us shuffle amongst the funds in the process.

This would at least give us the chance to move back and forth between the aggressive and conservative L fund mixes.