View Full Version : TSP Compared to National Trends, Features, Rules & Regulations

12-28-2007, 10:51 PM
I wanted to submit these following links for those interested as background information for us as Federal Employees to understand for comparison purposes what our TSP Board is, and is not, providing us in relation to National 401k Trends, Features, Rules and Regulations.


Many of the companies automating enrollment are putting their new hires into extremely conservative investment options, typically money markets and stable value funds. That's no way to earn the kinds of returns needed to beat inflation over time.
Although employers aren't necessarily disassembling their complicated plans, the average number of available options has leveled off at 14
Some of the target funds get a little too conservative at the end.
If your employer doesn't already have your 401(k) costs broken out on your statement, ask for that
Employers arenít exactly falling over themselves to offer the new Roth 401(k)s, but that could change as workers begin to understand their value. Roth 401(k)s are a twist on the traditional 401(k) that allows workers to make after-tax contributions to their plans. Instead of getting a tax break on your contributions up front, you can get a potentially bigger one down the road: all the money withdrawn from a Roth 401(k) in retirement is tax-free. Some financial experts have opined that most workers, except those close to retirement, would be better off contributing to a Roth 401(k) than a traditional 401(k).http://www.blueoceanportfolios.com/401k/?gclid=CL_q5o7NypACFRuhFQodBTLrXA

Social Security is a big question mark.

More than ever, the American workerís hope for a comfortable retirement is squarely on the shoulders of the 401(k) Plan.

Employees are filing class-action lawsuits against employers who are not honoring their fiduciary responsibilities. Congressional hearings are looking into questionable practices in the 401(k) industry. And a steady stream of new rules and regulations are popping up faster than employers can keep track of.

A big part of the problem is the investment choices offered in most 401(k) plans.

Simple investment choices that encourage high participation rates. Employees only have to choose their risk tolerance - we do the rest!

Consequently, employers have been increasing the number of investment options offered. In 1995, 22.2% of companies offered five investment fund choices and 65% offered six or fewer investment choices. By 1998, 17% of companies offered between 11 and 15 funds, and 74% of companies offered six or more fund choices, according to the Profit Sharing/401(k) Council of America's (PSCA) 42nd Annual Survey of Profit Sharing and 401(k) Plans survey
"We see a continued increase in the number of funds offered," said Paul Yakoboski, senior research fellow at the Employee Benefit Research Institute (EBRI). "There's more diversity."
"Within the foreseeable future, there will be unlimited funds," said Trisha Brambley, president of Resources for Retirement Plans Inc., a retirement planning consulting firm.
Another investment option that's growing in popularity is lifestyle (or life-cycle) funds, said David Wray, PSCA president. These funds are targeted toward different age groups or different risk tolerance levels. They are ideally suited for people who don't have the interest or time to manage their retirement money, he added. About 20% of funds offered this option in 1998, the PSCA found. This one sounds interesting but is beyond my understanding. This one is for the Brainiacs!

This one has so many links to understanding the current state of 401k plans, itís almost beyond absorption.

12-28-2007, 11:24 PM
Great Post Miss Piggy!

One of the real benefits of TSP, and the reason for the low administrative costs, is the simplicity of the plan. Many companies that have 15 or more choices have regreted how complicated it has become to manage.

I WOULD like to see, in the future, the following changes, which I think would benefit our accounts. But other than these, Im not really in favor of changing much else.

1. Surviving spouses being able to keep money in the TSP. Currently they are required to transfer it out. This is one that is on the agenda of the Thirft Board for a legislative change in the future.

2. The default changed to the age appropriate L fund. I support the idea that those who aren't investment savy need to have a better option than just the G. If they intentionally want the G, more power to them, but I think they should get the L for their age, and then have to choose the G if that is what they want. This too is in the plans for the Thrift Board asking Congress to make the change.

3. I would support adding another foreign fund, one that touches emerging markets, including China, India, Pakistan, etc. Right now our foreign options are only in developed countries, and we could use an emerging markets component to diversify in the mix, and pick up the gains that the emerging markets are going to produce. This one is NOT in the cards at this time, but I hope the Thrift Board would consider it in the future.

4. There has been talk about adding a Roth feature to TSP. I'm still not decided on this one yet. Too new for me to get a good handle around. I'd like to see perhaps a demonstration program, allowing a limited number of volunteers step up to the plate and try it first. A demonstration program of perhaps 3,000 (hey, there is that number again!) could be very inexpensive to set up and see how it works, who wants to contribute, and what they do with it. etc. That would be cool. It would give them the data they need to decide whether to offer it government wide.

5. I'd like to see an elected component added to the Employee Thrift Advisory Council, elected by share holders. THAT would certainly make them sit up and start listening to the people that elect them.

6. If they push through the limits on moving money, I would hope that they also allow, on a one-time basis, current employees to move their money out to a private plan. This is the least desireable way to handle the war, but it probably needs to happen if they fail to listen to what the people are saying.

That is my New Year's resolution/Christmas wish list for the year ahead.

01-07-2008, 10:37 PM
If there in fact is a conspiracy by private fund managers to entice TSP members to leave the TSP, I would not recommend that TSP participants rush into doing this.

If the law is changed, on my TSP, so that we are limited to being able to do interfund transfers, then we should all be compensated for this limitation with some other form of benefit, like being able to move all of our money out of the TSP funds without incurring any taxes applied to the entire sum on our accounts, or in being able to earn more on our TSP money after having our ability to do interfund transfers be limited. We have the right now to move our money unlimited times within the TSP, and if our rights are curtailed, we need to get compensated by some other means. Why should I let my rights slip away from my hands, without just compensation?

Big Mac
02-04-2008, 01:08 PM
I will be out in a New York Second, even if it meant a loss

02-04-2008, 07:13 PM
If (and its a big 'IF') they do allow a one time transfer from the TSP (403B) to an IRA, there are many dangers that you should all be aware of.

1) If the transfer is not done properly, you could end up paying a lot of taxes. (i.e. you have to make sure they don't do a 'roll over', but instead a 'transfer'.)

2) If you ever get sued, for whatever reason.. A 401K and our 403B (TSP) are better protected than an IRA (/or Roth) account.

That said, I would still pull my money out of the TSP as soon as they let me. I would also consider purchasing an umbrella policy (insurance) to protect my assets.

The TSP Board should be judged by the free market and choice!

Good winds