Thread: How does interfund re-distribute?

UofM_Matt wrote:

Question: Say I have 30% C 40% S and 30% I, then I submit an interfund transfer to become 42% C, 42% S and 16% I. How does it get rebalanced? Does TSP liquidate what I have and rebuy, or sell enough of one or the other to make up what it needs?

- Matt

BTW, this site ROCKS! I just found it and am very glad.

TSP does not liquidate all your fund holdings to rebuy at the new prices and achieve the new percentage. Instead, it simply sells shares in the fund that you are cutting your allocation to and buying shares in the other fund(s)in whichyou are increasing your allocation. In this particular case, you would be selling nearly 1/2 of your I fund holdings to add a little to S and a considerable amount to C.

Thanks for joining us Matt!

Mike -
Where did you find that info? On the tsp.gov site?

Thanks,
Tom

I didn't have to look for it - I've known this is true based on past participant statements. Any interfund transfer will show up and you'll see a minus sign in front of however many shares you sold in each fund, and you'll see another transaction in whichever fund(s) that shares were bought. The dollar amount bought will cancel out the amount sold, of course.

UofM_Matt wrote:

Does TSP liquidate what I have and rebuy

Does it matter? Could they have implemented a system that could be more unwieldy?

That's the problem with using a % based accounting system, rather than share based. Anyone out there ever call you IRA custodian and tell them to "reallocate" your holdings into funds based on percentages? No, you tell them to sell X shares or X dollars worth and purchase the new funds.

I don't call anyone - I just handle it all online. :P

How did they decide on the noon deadline for IFT's ?

It's been that way since the beginning. I don't remember hearing why.

I didn't hear anything either.Would think that it could be latter then noon, with electronic transactions. What about the folks in Hawaii, they have to wakeup at 5am to make an IFT.

There doesn't seem to be any way to make suggestions to the governing board. They created these L#### funds, but nobody asked the participants what they might want, such as a fund which might short the market.

I think this is where I want to ask this question, so I can clear this up in my brain.

I have never done the IFT stuff. I have been G 15% F 15% C 70% the entire time I have been in the TSP. Before I start this IFT stuff I need to understand my question here.

Lets say as an example here, that I take everything out of the F and C and put it in the G. I have a current balance already and a current ammount of shares.

With the total of shares I have already between the F and C, would these shares now increase in order to keep the current balance I had before I put them into the G?

What I am asking here is, will the balance in my account before IFT to G correct and still be the same balance after the IFT? Or will it show that I have less of a balance now, since the G share prices are lower than the C share prices? Will my total shares go up?

Hope I did not confuse. But I need to get it straight to make sure I am seeing things properly.

Thanks for any help.

For the sake of simplicity, lets say your account balance is $1,000.00. We will use the current fund prices so you can get an accurate grasp at this.

G Fund - 15% allocation @ $11.75 = 12.7659 shares ($150.00)

F Fund - 15% allocation @ $11.14 = 13.4649 shares ($150.00)

C Fund - 70% allocation @ $15.95 = 43.8871 shares ($700.00)

Now lets say that you requested an IFT before noon today. You would sell all F and C shares at today's cob prices, and buy G at today's cob price. Your account balance would be:

G Fund - 100% allocation @ 15.95 = 62.6959 shares ($1,000.00)

Hope this helps you.

Originally Posted by Buckeye

For the sake of simplicity, lets say your account balance is $1,000.00. We will use the current fund prices so you can get an accurate grasp at this.

G Fund - 15% allocation @ $11.75 = 12.7659 shares ($150.00)

F Fund - 15% allocation @ $11.14 = 13.4649 shares ($150.00)

C Fund - 70% allocation @ $15.95 = 43.8871 shares ($700.00)

Now lets say that you requested an IFT before noon today. You would sell all F and C shares at today's cob prices, and buy G at today's cob price. Your account balance would be:

G Fund - 100% allocation @ 15.95 = 62.6959 shares ($1,000.00)

Hope this helps you.

Ok got one thing straight, that the total balance going into a different fund stays the same, correct? That is until any changes during the markets for that day? Of course then this works the same going the other way into a fund with higher share prices, correct?

But, not clear on some other things here yet.

Between the 3 funds here you have a total of 70.1179 shares to begin with. At the final tally in the G fund you now show 62.6959 shares. Would you not have more shares now, since the G fund share price is lower cost?

Now you are showing the G fund share prices @ 15.95 which is where it bends my brain cells a bit. lol How is this? That price was the C fund share price.

Also, what is this COB and all?

Just a couple things to clear up is all and I will have it down.

Yes this helps.

Thank you