Brokers Lure Soldiers Out Of Low-Fee Federal Retirement Plan

[tsptalk]

Brokers Lure Soldiers Out Of Low-Fee Federal Retirement Plan

"As a legacy of his government service, he kept his money in the Thrift Savings Plan, considered the gold standard of 401(k)-type programs for its rock-bottom fees. Yet all but one company told him to roll over all his money into individual retirement accounts. On average, stock funds charge almost 50 times more than the government plan."

More: Brokers Lure Soldiers Out Of Low-Fee Federal Retirement Plan

 

[nnuut]

Yep, I never felt good about rolling over my TSP!

 

[Frixxxx]

And here is where choice should be based on experience.

If a TSP account holder is setup in G Fund and never touches it, and decides to roll-out of TSP when they retire, they will pay more management fees.

BUT

If they pay 5% on a 8% APY return on their investment, this outperforms the G Fund.

If they are that out of touch with their retirement, then I say they win. Most in-touch people here see a better way. (I Think)

 

[Birchtree]

TSP is an excellent investment for the long haul especially for the working member that gets to participate in dollar cost averaging - come rain or shine. Just keep the money flowing and the gains will take care of themselves. Everyone is going to eventually have to become a little cognizant of their future and how to prepare for it. Open a Roth IRA and allow yourself the opportunity to experience some emotional pain and greed and learn as you go. If you stick with TSP stay out of the G fund and the F fund - take the risks of equities and participate in this great opportunity. The next 20 years should be sufficient enough to build wealth.

 

[James48843]

LEAVE IT ALONE!

John LaRandeau, a retired civil engineer from Omaha, Nebraska and autocross sports car

John Turner suspected that brokers were encouraging federal workers to ditch their top-flight retirement plan. So he went under cover.

The former U.S. Labor Department economist called representatives at companies such as Bank of America Corp., Charles Schwab Corp. and Wells Fargo & Co. He identified himself as a potential client grappling with what to do with his own nest egg.

Turner thought he knew the right answer: Leave it alone. As a legacy of his government service, he kept his money in the Thrift Savings Plan, considered the gold standard of 401(k)-type programs for its rock-bottom fees. Yet all but one company told him to roll over all his money into individual retirement accounts. On average, stock funds charge almost 50 times more than the government plan.

“It’s a scandal,” said Turner, director of the Pension Policy Center in Washington. “They are trying to sell me an IRA clearly not in my interest. It’s in their interest. They want to get the fees.”


More:
Brokers Lure Soldiers Out of Low-Fee Federal Retirement Plan - Bloomberg

 

[Buster]

Re: LEAVE IT ALONE!

Speaking from my own experience...When I retired, I rolled my TSP into an IRA that guaranteed a minimum yield of 5% annually and has been averaging 9% consistently, I still drop in a few bucks every now and then, so technically I can still contribute, whereas in the TSP I could not..I may have been making more if I was savvy enough to juggle the two monthly IFT's in TSP but I didn't want the hassle...and Yes, I Pay a small fee for them to handle it..but it's meager compared to my annual returns...People probably spend more monthly on their E-cig hookahs...

 

[weatherweenie]

Re: LEAVE IT ALONE!

That would be my question, is the difference in fees really that much?

It makes me think of when we went from unlimited IFTs to the two IFT system. The idiots on the TSP board got that restriction passed using the 'it costs A LOT more to have unlimited IFTs'.

If you pay a little more, for more flexibility, it seems like it's a reasonable trade off.

Where are you getting a guaranteed 5% Buster?

 

[Buster]

Re: LEAVE IT ALONE!

Where are you getting a guaranteed 5% Buster?

A company through my FAA credit union