By most measures, the just-ended year was a tough one for the 6.7 million Thrift Savings Plan participants. The funds are all down for the year, which means balances are smaller going into 2023 than they were going into 2022. That’s the case for most people with 401(k) savings.
One under-30 plan holder I spoke with was philosophical about it. In about six years of working, she’d amassed a rather tidy sum. It dropped by about 20% through the year. Her response: Up her contribution from 6% of gross salary to 7%. Buy more while prices are low.
That’s about the best advice you’ll find from the investment gurus. Keep the contributions steady, while paying no attention to daily prices of the fund or individual security. It’s called dollar cost averaging. Financial advisor and regular Federal Drive with Tom Temin guest Abe Grungold pointed out that in modern times the bull markets have tended to last a year or a year and a half.
As investors, then, the Federal Retirement Thrift Investment Board did neither spectacularly better nor spectacularly worse than the many 401(k) plan companies.
As an agency, the FRTIB has mostly recovered from a difficult deployment of a new management system and front-end web site for its participants. My operating assumption in life, one of them at least, is, all software is lousy. Someone prove me wrong. And so it was for the TSP user site. I won’t rehash the extensive reporting published about the rollout.
It’s also fair to say, most of the issues have been fixed. In an interview, TSP spokeswoman Kim Weaver said they’re actively working on one missing piece of functionality. Namely, letting plan holders change at will the amount of their monthly withdrawals. This has been a big sticking point. Grungold said several of his clients have mentioned it.
I wondered about whether those who, because of age, must take a required minimum distribution or face tax consequences. Weaver said if someone is under-withdrawing, the TSP will send them a make-up check before year-end. Therefore the capability of continually adjusting withdrawals is a matter of personal needs in a given month, not a penalty avoidance concern. Still, the ability to change withdrawal amounts at will had been a feature in the old system since 2019, and people liked it.
Weaver said that because of data security concerns, the TSP will not offer online views of a person’s full TSP activity history. This wasn’t available from the old system either, so you’ll have to send away for that. But you can view year-end balances for the past 10 years, and your transaction history dating from June 1 of last year.
“It’s not available as live data because to transport that over and to protect it would have cost money and added additional security risk,” Weaver said, adding, “We looked at usage and determined that it was not sufficient to outweigh the costs and risks of transferring over live data.”
Perhaps most importantly, Weaver said, things have stabilized on the customer service front, with reduced phone wait times and more people getting answers online using the virtual assistant or live chat. Both are features of the new system. Some 84,000 people used them in November.
Beyond that, during the height of the post-deployment scramble, I detected an undercurrent of worry. In having difficulty accessing their accounts, some people wondered whether their TSP funds themselves had somehow gone into the ether. That was never a danger but I can see how such a worry would develop, given the potency of online threats these days.