Investors in the federal Thrift Savings Plan have until noon EDT today to make changes in their account allocations. The temporary freeze includes interfund transfers and changes in contribution allocations. Access to MyAccount will be temporarily suspended. But investors will be able to call the ThriftLine and speak with a TSP rep, or to use the automated response system for account changes until 9 p.m. EDT. And there is no need to panic. This precedes a change many TSP investors have long sought and will welcome.
TSP investors who don’t want to make any changes or to invest in new funds being offered don’t have to do anything. For those who want more investment options and are willing to pay higher administrative fees this is the chance they have long been waiting for. There will be a new TSP app, help with rolling money into the TSP, and many other improvements that should make life easier for TSP participants. These changes which begin next week are outlined in a 133 page report from the Federal Thrift Investment Board that was published in the Federal Register.
The best thing for most people to do with their fund choices during these tough economic times is nothing. Sometime next week the federal 401k plan will open new investment doors allowing participants, who now have about 15 investment options, to choose from nearly 5,000 funds.
Currently, TSP investors have been limited to three stock-index funds (C, S and I) covering the large cap U.S. market, small cap stocks and an international stock fund. Investors also have a bond-index F fund and a special Treasury securities G-fund as options. There are also a selection of self-adjusting target date funds based on when you think you will start tapping your TSP account. That date could be as soon as you retire, or much later. The TSP is known for charging some of the lowest fees in the business. Those who sign up for any of the new investment options will get the same management and oversight. But they will also pay higher fees. Financial planner Arthur Stein talked about the pending TSP changes on our Your Turn radio show May 25.
Bottom Line: This is a big, as in huge, change. Also a good one. If you want to stick with the current program you are free to do so. If you want to take a portion of your TSP account and make new investments, you can do that too. Those who stick with the current program will pay the same fees and administrative costs. Those who go into the new program will pay more for those services. But the strict government oversight on the program will remain in place.
In Iceland, March 1 is celebrated as “Beer Day.” It commemorates the day when, in 1989, prohibition officially ended in the country. Though all alcohol was banned in 1915, wine was legalized in 1922 and hard liquor in 1935.