Thread: TSP Transfer Fees and/or Transaction Limit Discussion

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

All of them were sent during lunch breaks!

Originally Posted by crhuss

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.

Originally Posted by 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!!!!

Wow. Very well written crhuss!

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.

Originally Posted by 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.

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 ) even though 2 people order burgers everyday?.

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/7/257/2...cfr1601.32.pdf

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

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

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

FS

Nice job folks!!!

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.