Thread: Can someone explain the TSP's Fund charges?

Brian,
I know it's an annual expense thats charged to member accounts. Last year it was about 30 cents per 1000 dollar of investment. When it's taken out, I don't know! Maybe someone else knows when!

Originally Posted by brian_allen_19

Is there not a charge per $1000 in each Fund? How/When is that "taken" from your money? you may have to use "Barney" terms to explain to me..lol.. Sorry

Go to official tsp.gov click on tsp features then click on understanding your tsp account.

I know there is more charged for the stock funds... just wondering if there is a "magical" date to have your money in the G Fund to avoid the higher charge...lol

They probably shave points from each fund several times per year - that way the larger balances pay a proportionately larger fee, which is only fair. Ever wonder where the capital gains or dividend income from the funds go - it's what pays the administrative fees.

I found the following statement in the TSP Annual audit report:

Administrative expenses are a component of the share price
calculation.

The report can be found here:
http://www.tsp.gov/forms/financial-stmt.pdf

Administraive fees in the TSP is the same as Admin Fees on any 401K plan or IRA. They are deducted proporationately throughout the year on a daily basis. Say for example at the beginning of the year they estimate 4 basis points as a cost for the year. They would divide this by 365 (some funds to this by trading days (around 245) and charge this per day and as the year goes on, either by a monthly or quarerly time period this amount is adjusted up or down so at the end of the year the actual costs are charged....
In short there is no best time of the year to avoid these charges because they are charged constantly.

It's laid out in the Code of Federal Regulations, Title 5, Chapter VI, Section 1645 - Calculation of Share Prices:
http://www.access.gpo.gov/nara/cfr/w...fr1645_07.html

Sec. 1645.3 Calculation of total net earnings for each TSP Fund.
(a)Each business day, net earnings will be calculated separately
for each TSP Fund.
(b) Net earnings for each fund will equal:
...
(2) Minus the accrued administrative expenses of the fund,
determined in accordance with Sec. 1645.4.
(c) ... The total net earnings will be used to calculate the share price for that business day.

Sec. 1645.4 Administrative expenses attributable to each TSP Fund.

A portion of the administrative expenses accrued during each
business day will be charged to each TSP Fund.

Sec. 1645.5 Calculation of share prices.

(a) Calculation of share price. The share price for each TSP Fund
for each business day will apply to all sources of contributions for
that fund. The total net earnings (as computed under Sec. 1645.3) for
each fund will be divided by the total fund basis (as computed under
Sec. 1645.6) for that fund. The resulting number, computed to ten
decimal places, represents the incremental change in the value of that
fund from the last business day to the current business day. The share
price for that fund for the current business day is the sum of the
incremental change in the share price for the current business day
plus the share price for the prior business day, truncated to two
decimal places.

Hope that clears it up!