After a drop almost across the board for the Thrift Savings Plan during April, participants will see a few more weeks of change coming up for the TSP.
All TSP transactions will become temporarily unavailable between May 26 and the first week of June, as the Federal Retirement Thrift Investment board updates its database and adds a mobile app for users.
D.C. area financial planner Arthur Stein said participants “need not be concerned about the downtime.”
“The new money that goes in will be invested according to their current specifications, and the money that’s already in the TSP will just continue to earn money. They’re not going to be penalized in any way,” Stein said in an interview with Federal News Network.
Stein said there is no reason to make changes because of the upcoming transition. But participants who want to make changes should do so prior to the scheduled downtime.
“The only thing would be a concern is if someone thinks that they would want to make a change because they’re worried about the stock or bond markets going up or down sharply in the future,” Stein said.
The Federal Retirement Thrift Investment Board, in charge of the TSP, said in a May 2 press release that the transition period will start May 16 and end the first week of June, but the downtime will only occur in the second half of that period. Current TSP investments will remain active during the transition.
“Unless you make a change to your investment elections, your current TSP investment choices will remain the same for both future contributions and current allocations,” FRTIB said. “Most TSP participants won’t need to take any actions to prepare for the transition.”
FRTIB Director of External Affairs Kim Weaver told Federal News Network in an interview what to expect leading up to the transition and how participants should prepare.
“Let’s say you had been planning on taking a withdrawal for a specific purpose. We want to make sure that people are aware that there’s a timeframe on that,” Weaver said. “If they are planning on taking out a loan, May 16 is the last day to do that. Similarly, May 16 is the last day to complete a withdrawal request until after the transition.”
The changes to TSP during the transition period include a new mobile app, an updated interface for My Account, a 24/7 virtual assistant and electronic signature options. For an additional fee, FRTIB will also add an option to invest some TSP savings in a mutual fund window, an account that allows users to access a selection of more than 5,000 mutual funds.
TSP participants should consider whether this transition period will affect their retirement planning and review their current investment choices to make sure they still align with individual retirement goals, FRTIB said.
“For retirees who are receiving money from their TSP account on a regular basis, any payments they were going to receive during the downtime will actually be made before the downtime,” Stein said.
Weaver said FRTIB is planning to be back up and running on June 1, but that participants should plan for the transition to potentially last through the full first week of June.
Transitioning to a new record keeper as part of the TSP update is a big lift, Weaver said. The transfer will move over all TSP participants’ data, including name, account number, address, contributions, earnings, employer contributions, loans and withdrawals.
“We have to clear the queue out. May 16 gives us enough time to process all the pending loans and withdrawals, disperse the funds and then cut over to the new record keeper with a fresh slate,” she said.
After the transition period ends, FRTIB said participants will need to create an account under the new system to get access to all the new features.
“You will need to take some steps to set up a new login to the new My Account after the transition is complete in June. We’ll let you know what you need to do when the new My Account becomes available,” FRTIB said.