When/how do we pay our "dues" for having money in TSP

[brian_allen_19]

Is it once a year that they take their share of our money? I am not really sure what the process is? Is it better to have your money in a certain fund on a certain day to avoid higher %? Please help?

[tsptalk]

Interesting question. One I honestly haven't thought too much about. I will assume (ass u me) that they take it out slowly. It could be why the fund returns don't always match the indices they track.

[Spaf]

Now that explains why the market went down on Thursday! :i

http://www.tsp.gov/resources/top.gif (http://www.tsp.gov/features/chapter05.html#top)

Yes. Major administrative expenses of the TSP include the operating and development costs of the record keeper's computer system, the operations of the TSP Service Office, and the printing and mailing of publications and participant statements.

Two sources of funds are used to cover the expenses of the TSP. The first source is forfeitures of any nonvested Agency Automatic (1%) Contributions. FERS employees who leave Federal service before they are vested in the TSP forfeit the Agency Automatic (1%) Contributions and attributable earnings on those contributions. (See "What does "vesting" mean? (http://www.tsp.gov/features/chapter04.html#sub2)".)

The second source of funds is earnings on participants' accounts. Because forfeitures are not sufficient to pay all expenses, a portion of earnings is used to pay the balance of administrative expenses. Administrative expenses, after forfeitures, are deducted from the earnings of the G, F, C, S, and I Funds in proportion to the size of those funds. Investment management fees of the F, C, S, and I Funds are borne exclusively by the participants investing in those funds. (See "How are earnings allocated to my account? (http://www.tsp.gov/features/chapter05.html#sub4)".) Information on TSP expenses is provided in the annual audited financial statements (http://www.tsp.gov/forms/financial-stmt.pdf) of the TSP, which are posted on this Web site each April.

The effect of administrative expenses (after forfeitures) on the rates of return of the five funds is measured by the expense ratio of each investment fund. The expense ratio for a fund is the total of accrued administrative expenses charged to that fund during the period divided by that fund's average balance for that period.

Your share of TSP net administrative expenses is based on the size of your account balance. For example, the G Fund expense ratio was .10 percent in 2003. This means that in 2003, earnings in the G Fund were reduced approximately $1.00 for every $1,000 of G Fund account balance. The expense ratios for the G, F, C, S, and I Funds for the last 10 years are as follows:







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Year
G Fund
F Fund
C Fund
S Fund
I Fund

1993
.12%
.14%
.13%
-
-

1994
.10%
.12%
.11%
-
-

1995
.09%
.11%
.10%
-
-

1996
.08%
.10%
.09%
-
-

1997
.07%
.08%
.07%
-
-

1998
.06%
.08%
.07%
-
-

1999
.05%
.07%
.06%
-
-

2000
.05%
.07%
.06%
-
-

2001*
.06%
.06%
.06%
.05%**
.05%**

2002
.06%
.06%
.07%
.07%
.07%

2003*
.10%
.10%
.10%
.10%
.10%



*The expense ratios for 2001 exclude approximately $41 million of capitalized expenses that were written off in 2001. These expenses arose from the Board's July 2001 termination of its contract with American Management Systems, Inc., for the creation of a new record keeping system. The Board's litigation with AMS was settled in June 2003. The Board received $5 million in the settlement; the remaining expenses of approximately $36 million were charged to participant accounts on June 23, 2003, and are included in the 2003 expense ratios. The charge to participant accounts was approximately .03%.
**The 2001 expense ratios for the S and I Funds are for May 2001 (the inception of the S and I Funds) through December 2001.
[line]
[/b]

Also the loan program has changed and will cost you $50.00 for every loan. Justification was that only certain members used the loan program and continually used it having loans out all the time(you can have 2 loans simultaneously) so they should be the ones paying for it. With this rationale at the TSP, I think the near future will hold some sort of charge for people making more than the average amount of interfund transfers. Or maybe giving a monthly allotment of transfers and charging over your quota.