You can’t walk up to the mutual fund window at the Thrift Savings Plan, and put cash on a granite counter. It’s virtual. Regardless, it’s in danger of closing.

Part of the problem is how few TSP account holders are actually using it to move a portion of their TSP. One reason for that could be that the window entails costs to the investor. You’ve got to pay a $55 annual administrative fee, a $95 annual maintenance fee, and a stiff $28.75 per trade. Plus, as the TSP points out, the mutual funds themselves typically come with fees of their own.

Converting part of your TSP to any of the mutual funds is procedurally intensive, too.

More fundamentally, the TSP brochure writers note, “If you choose the mutual fund window option, the first risk to consider is whether your investments in mutual funds will grow enough to offset the additional fees.” If the TSP funds track the various indices, and they generally do, the window doesn’t present a particularly compelling case.

Non-scientific polls Federal News Network has conducted reveal scant interest in the mutual fund offerings. Of course on Reddit they hate everything. The statics bear this out. Mutual fund investment so far amount to about .00025% of all the money in the TSP system. Hardly a stampede to the mutual fund window.

For the Federal Retirement Thrift Investment Board, you’ve got to wonder if the juice is worth the squeeze. The Board had good intentions, and it had to design a system to confirm to the myriad of tax rules concerning these things. Sometimes the customers just don’t buy.

Then there’s the environment, social and governance, or ESG, issue. Somewhere among the 4,600 mutual funds the TSP offers at its windows, are those that pick stocks based on factors other then pure return on investment.

Thiago Glieger, a wealth advisor with RMG Advisors in Rockville, Maryland, works with many federal employee investors. He said such funds tend to have high costs because of the intensive research they must undertake. Returns are typically lower. And, he said, quality has suffered on average as more funds jump into the ESG business.

Still, if someone wants to invest according to whatever values they find important, that’s entirely their business. To avoid tobacco, alcohol, firearms, explosives, mining, non-union companies; or to support trees, clean water, solar panels, whatever — some people may choose to accept lower returns.

After all, it’s their money.

So I’m puzzled by the gambit back in May by Representative Chip Roy (R-Texas), who introduced legislation to bar TSP funds from going to ESG. The No ESG at TSP Act, he said, “would prevent the TSP from allowing taxpayer dollars to flow into woke ESG funds.”

Except the dollars so flowing would not be taxpayer dollars. Congressman Roy must know the government pays its employees. They’re civil servants, not volunteers. When you pay people for a service rendered, it’s their money. It’s no longer the taxpayers’ money. Or am I missing something?

Should this provision become law, the Board has indicated it would likely kill the window because it would have no way to actually implement it.

Nearly Useless Factoid

By Alyssa Miguel

The Northern cardinal is the state bird for seven states.

Source: World Atlas

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