What Thrift Savings Plan participants can look forward to this year

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No one is looking back fondly on last year when it comes to the Thrift Savings Plan. The markets had a terrible year across the board. And the TSP board is still catching up from a difficult deployment of a new system for plan members to manage their accounts. To find out what to expect in 2023, the Federal Drive with Tom Temin   spoke with Abe Grungold, financial coach and retired federal executive.

Interview transcript:

Tom Temin
Oh, this is a Federal News Network podcast. No one is looking back fondly on last year when it comes to the Thrift Savings Plan. The markets had a terrible year across the board. And the TSP board itself is still catching up from a difficult deployment of a new system for plan members to manage their accounts here with what to expect financial coach and retired federal executive Abe Grungold. Abe, what’s your experience been as a participant and having clients participate? Is the TSP past some of those troubles yet?

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Abe Grungold
Well, Tom, first of all, Happy New Year, and hopefully the TSP will be going in the right direction in 2023. But as a 35-year-participant in the TSP, the website, which was recreated past June, the last six months, reminds me of my favorite movie, “The Good, the Bad and the Ugly”. And there’s some good things that have happened with the website. There are some bad things, and there have been some ugly things, especially from my experience, and also some experiences from my clients.

Tom Temin
Yeah, so let’s talk about the ugly first, what is it that they need to pretty up at this point?

Abe Grungold
Well, the ugly has been from my own personal experience, I tried to take out a monthly withdrawal from the TSP back in August. And the minimum for a monthly withdrawal is $25. However, when I tried to take out $1,000, I could not be done online, or even calling in to the representative at the TSP, they said that it was a system wide problem that I should try back in a couple of weeks, I call back in a couple of weeks, the representative said, ‘Well, you can’t do $1,000 monthly withdrawal, you’re going to have to do a $4,000 monthly withdrawal, because that’s the only figure that seems to fit in your module for your profile,’ which could not be explained, just could not be explained.

Tom Temin
Well, the question is, if that persisted over the course of a year, can someone be in tax trouble for not taking the required minimum distribution?

Abe Grungold
Well, the required minimum distribution has to be based on the balance of your account. And if you can’t put the right figure in there, you’re going to have some problems. But if you don’t want to take out a $4,000 withdrawal, you are going to be forced to do it based on maybe the balance of your account or something that’s causing that to happen. The TSP rep just couldn’t explain it.

Tom Temin
Right. But has it been repaired since then?

Abe Grungold
As far as I know, no, because I tried to get on recently. And I wanted to adjust my figure from 4,000 to another figure, say back to 1,000, or 2,000. They said ‘you can’t do that, you have to cancel your monthly withdrawal, and then create a new one.’ And it just seems strange that you have to go through so many steps. And you could lose a month where you don’t receive a monthly withdrawal. So that is really somewhat of the ugly side of how the mechanics of the TSP website are working.

I have another story from a client of mine who tried to repay their TSP loan from the CARES Act. The CARES Act, allowed TSP participants to make a loan and not have to be on a payment schedule. Well, he wanted to pay this $50,000 loan back. Could not find any information on the TSP website, nor did any of the representatives from the TSP 800 number. They didn’t even understand what the CARES Act alone was. So he ultimately got it resolved, but he went through some very strange channels to do it.

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Tom Temin
All right, we’re speaking with Abe Grungold. He’s the owner of AG Financial Services and a retired 36-year-federal employee. But fair to say I think TSP has done some major league repairs from that original June date, to where the generalized report seemed to be that most people are getting the service they need from the website.

Abe Grungold
Yeah, the good part of it is is that the website has a very appealing look to it, where you know, I now can go through the website without using my reading glasses. Some of the fonts are very large. There are enhanced colors, it’s a little bit easier to find things. And the other good thing about the website It is that you can even thankfully to the change in the TSP policy and 2022, you can repay a TSP loan, even after you have terminated from federal service, they give you several repayment options, which is wonderful, you know, a lot of federal employees panic that they have to repay their TSP loan prior to termination. They don’t have to do that they can continue paying it on afterwards. So that’s the good part. There are some good features to the website.

Tom Temin
Yeah. And just getting back to that total functionality question, though it seems like they have nailed down at least the reports we get, they have one by one nailed down the defects or the rollout problems that they had from last June?

Abe Grungold
Well, there still are some what I would call the bad issues, they’re not good, and they’re not ugly, they’re bad. And that is that the TSP website just doesn’t give you the experience that you would get on, say a website like Fidelity or Charles Schwab, there are still issues where you cannot go back and look at your historical transactions. Say, I’ve been in the TSP for 35 years, I should be able to go back 35 years and look at the history of how much in contributions and the growth of my TSP, you can’t do that, because they’re not retaining that information. So a lot of the features that you would expect from you know, a change are just not there. And that’s the sad part, because I am sure that the TSP board spent millions of dollars, but it’s unknown as to what the details of that contract were with a censure and how they are still going to correct some of these issues. Because as a participant, you don’t want to receive less information that you have now with the prior website.

Tom Temin
And what are your clients telling you?

Abe Grungold
A lot of the clients are just unhappy all around with the TSP website, a lot of them want to leave, I don’t encourage them to leave from a personal standpoint, I am not leaving the TSP website. But if the website is just not working to the optimal satisfaction of the TSP members, time will tell how many members are going to be leaving.

Tom Temin
Well, what choice do you have, though?

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Abe Grungold
You certainly could transfer your TSP to another investment house like a Fidelity or Charles Schwab. And you could do a direct rollover transfer to an IRA [Individual Retirement Account] and not have to pay any tax in doing that step. So yes, there are options, you could do it on a partial basis, or you can do it on a full basis and certainly close out your account.

Tom Temin
Well, that’s like you say, a personal choice. And there are still benefits to the TSP. It’s a low cost operation. And their funds are generally well managed. So I’m not cheering for TSP but, they do have advantages, it’s recognized for that. Some of those qualities.

Abe Grungold
Look Tom, I love the TSP, I’ve been a member for 35 years, you are getting the lowest expenses, compared to any investment management that you’re going to find anywhere. The investments themselves are plenty to choose from. And they’re wonderful, they have a wonderful 35-year-track record. I do not plan on leaving, but some of the people out there just are not satisfied with the changes. And time will tell what’s going to happen.

Tom Temin
And let me ask you this. What’s your prospect for the funds themselves in the coming year? Are we going to see a bull market return or at least a non bear?

Abe Grungold
I think somewhere during the year there’s going to be a comeback in the market because I went through it in ’87, with the Black Friday. I went through it in 2000 with the dot-com era. I went through it in 2008 to 2009, and the pandemic era, and every time there was a fall in the market that only lasted for about a year, a year and a half and then it would come back. I’m not saying that is a guarantee that the market will come back. But I think it will slowly progress in 2023. And maybe we could see it an all time new high on the Dow the S&P 500 or the NASDAQ. I’m hoping for that I’m optimistic.

Tom Temin
Abe Grungold is the optimistic owner of AG Financial Services and a retired 36 year-federal employee. As always, thanks so much.

 

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