My money, our TSP fund, and the 2008 TSP IFT Rule.

[KevinD]

I think you should look at it from their side. What is their case likely to be and what will be your response to their argument?

What is customary for other defined contribution plans? Is there a norm?

 

[RealMoneyIssues]

I think you should look at it from their side. What is their case likely to be and what will be your response to their argument?

What is customary for other defined contribution plans? Is there a norm?

I'm sorry, I can't think like that... How can we look at it from their side IF IT DOESN'T MAKE ANY SENSE TO A FAIR PERSON

 

[KevinD]

Maybe I should have said that our arguments should be crafted by what we anticipate their arguments to be. You know...prepare in advance by playing devils advocate. I'm sure the attorneys will do their best but I'm also sure that we know more about this situation than they do.

I wasn't trying to suggest that we try to see things their way. Far from it...

 

[nasa1974]

I think you should look at it from their side. What is their case likely to be and what will be your response to their argument?

What is customary for other defined contribution plans? Is there a norm?

I would have to go back and research this to get the information absolutely correct but to paraphrase this is what the reasoning was for restricting us to only 2 IFT's for the month.

1) The FRTIB's biggest excuse to allow 2 IFT's was the cost per trade it was costing ALL the members for just a few that made multiple trades a month. They have yet to produce what the cost was then vs. the cost per trade now.
2) The FRTIB said it would be difficult to manage a program that would allow us to pay X amount of dollars to perform more than 2 IFT's a month.
3) The FRTIB also said that how they were going to allow us to use the 2 IFT's per month was better than similar businesses that managed retirement funds.

Thats how I remember it.

 

[Show-me]

Nasa is correct, I spoke to Tray Ray and Greg Long. I mentioned the paid trades and they did not like it because they wanted a Thrift "Savings" Plan not a Thrift "Trading" Plan. They did not like that others were paying for the fews inactive account transferring. The just wanted sheep to sit in buy and hold forever even though the world of investing has changed dramatically with electronic trading and instant market news and statistics.

The trading cost per member and per trade is the key.

IMO, we should get more trades per month first and then a fee per trade there after.

 

[nsurf9]

Back in 2008, the TSP Board's restriction actually allowed 3 IFTs. I hit 4 and they sanctioned me also. I did, however, get it lifted until the computer inforced the new rule.

After reading The Federal Employees' Retirement Act (link below), my first obvious impression is a lot has changed since then. First, we're getting next to nothing from the G fund ('til 2014?) and we're required to expose our retirement to more risk in equities to make up the difference. In 1986 most stock was ordered and/held in paper shares. Today, stocks are bought and sold in milliseconds at a fraction of the effective cost of 1986 in E-Trade, AmeriTrade, etc. We paid $41 million for just such an internet based system for TSP, but were permitted just one additional IFT.

The question then becomes, why can our internet based system and our brokerage make fund delution and time delay issues a non-issue for a reasonble fee.

The Department of Justice is their duly appointed counsel - which should be no cost to the TSP. I would hope a judge and its TSP members could hold them to that cost savings avenue. A settlement for monitary damages is unlikely as although the Exec Director and Board are exempt, I not sure the fund itself would not be somehow liable, if it weren't for the problem that profits and/or losses (damags) will likely be shown to be speculative and would not receive any award. Additionally, that it is unlikely we'll receive a monitary awarded, our case would be likely be an hourly arrangement paid solely out of the legal fund, instead of contingency arangement.

http://www.soa.org/library/research/...88v40pt119.pdf

 

[nasa1974]

Back in 2008, the TSP Board's restriction actually allowed 3 IFTs. I hit 4 and they sanctioned me also. I did, however, get it lifted until the computer inforced the new rule.

After reading The Federal Employees' Retirement Act (link below), my first obvious impression is a lot has changed since then. First, we're getting next to nothing from the G fund ('til 2014?) and we're required to expose our retirement to more risk in equities to make up the difference. In 1986 most stock was ordered and/held in paper shares. Today, stocks are bought and sold in milliseconds at a fraction of the effective cost of 1986 in E-Trade, AmeriTrade, etc. We paid $41 million for just such an internet based system for TSP, but were permitted just one additional IFT.

The question then becomes, why can our internet based system and our brokerage make fund delution and time delay issues a non-issue for a reasonble fee.

The Department of Justice is their duly appointed counsel - which should be no cost to the TSP. I would hope a judge and its TSP members could hold them to that cost savings avenue. A settlement for monitary damages is unlikely as although the Exec Director and Board are exempt, I not sure the fund itself would not be somehow liable, if it weren't for the problem that profits and/or losses (damags) will likely be shown to be speculative and would not receive any award. Additionally, that it is unlikely we'll receive a monitary awarded, our case would be likely be an hourly arrangement paid solely out of the legal fund, instead of contingency arangement.

http://www.soa.org/library/research/...88v40pt119.pdf

First of all thanks for taking this on.

Monitary damages I think would get this whole thing tossed out before it even started. It would be hard for us to prove that the money wouldn't have been lost even with more IFT's. How would you determined who, let alone how much.

I know the issue of fees came up during our arguments. Didn't they say that they would have a difficult time collecting possible fees?

I think showing how the market has evolved shows how trying to keep the TSP a passive system is outdated. Back in the beginning if you left your money in the G fund for your career and deposited the maximum every year at 6% every year you would have over $250,00.00 for retirement (fast math). Not a lot of money, but for someone in CSRS not bad. But how many actually put in th emax and the G fund did not keep a steady percentage from year to year. The G fund didn't even make 4% last year, if my math was correct. OK I'm rambling. Later.

 

[nsurf9]

First of all thanks for taking this on.
The G fund didn't even make 4% last year, if my math was correct.

And G's return, according to the President and Fed Bernake, along with the prime rate, will have their efforts to be kept low until 2014.

The other half of the 1986 story, besides saving a few percent off CSRS total costs, was that Congress like the fact that federal employees' investment in G fund would defer the Government's payout of wages.

I will see the Roses soon, and we'll have a better idea. All they have to do is show us a winning case. But, I want to be able to say, right now I have monitary commitments from over 100 members to this effort and I believe, once mainstreamed to a larger TSP audience, can assure ample funding thru final decision.

PS, what you're thoughs being able to opt out with your current TSP balance to a Self-Directed, Tax Deferred LLC IRA? Your account would thereafter remain open and receive contributions and matching fund - but thereafter under the 2008 rule. You could invest in ETFs basically the same as we're invested now, only it would be the price of E-Trade, Ameritrade, etc, plus a world of other investments.

 

[FishSqueezer]

I'm still in, but want to remind of the idea of not just focusing on IFTs. It wasn't my idea, but there are additional alternatives that could be negotiated, such as moving the Noon ET trade time to Market Close.

 

[Mcqlives]

Nsurf...Reference post #68. I would love to be able to directly fund, with pretax benefits, an independent growth IRA. Right now most of my private investments are in ROTH accounts with a few dividend reinvesting stocks so having that option would be fantastic.

That being said, let's keep focused on a couple of key targets for now. I leave those targets up to you and some of the long term members that fought the fight in 2008 for all of us (Thanks all for trying!). I like the idea of more transfers, later deadlines, fee based transfers, opt out for other investments, and most of the other ideas that have been sent to you on your thread. We just have to pick which battle to fight.

 

[nsurf9]

I didn't meet with the Virginia attorney today as I was too busy with Uncle Sam's work. I will meet sometime next week.

Without out clear definitions, Congress did, it seems to appear to intend TSP to be an indexed fund that may well be intended to be passive. The question, then becomes what is "in the best interest of its participants." One question that comes to my mind, is would all this effort be worth one or two, possibly fee based, additional IFTs per month that could be possibly be traded later into the day; and, an option to roll out a current balance to a qualified IRA. The existing accout would remain open to receive all subsequent contribution and matching funds, but thereafter, that balance would remain under TSP rules.

Remember the old days. Thought the following excerpt from Ms. Ray of TSP might, however, be of interest. It was published upon completion of the TSP's web based system.

"In the old system, you could move money from one account to another once a month. Now you can do it every day," Ray said. Investors will be able to log on to the TSP Web site and see the value of their accounts as of the close of the previous business day.

TSP retirement system work complete -- Washington Technology

Incidentially, TSP was denied in US Federal District court, to bring suit on its on. Court found DOJ was its legal counsel. Decision was appealed by TSP, but a settlement was entered with AMS, which likely made the appeal moot.

http://www.govexec.com/pay-benefits/...lawsuit/10603/

 

[nasa1974]

If congress really wanted our TSP to be passive why didn't they put us just in the G fund with matching dollars. With the opportunity to move our money between funds that does not make it passive, even with 2 IFT's a month.

 

[nsurf9]

Actually my reading indicates that the "passive" feature didn't refer to participants at all. The term "passive," from my reading, referred only to TSP management investment approach.

"Active" investment referred to the regular approach most investors do to research a specific investments in order to make a financially sound choice. Whereas, investing by way of "indexing," or buying a statistically representative number of shares of say the Wilshire 4500, would allow TSP to broadly and passively invest, with little or not research into an index of funds to remove not only a significant degree of admistrative and research costs, but also remove the potential for politics (an important consideration) to enter into the TSP fund.

Additionally, proxy share votes held in the invested corporations are not acted upon. Another political avoidence measure. I'm not sure what benefit Blackrock may derive from the unacted proxy votes.

In fact, a major consideration of Congress' choice of the current plan, one of I believe it was 4 plans, was chosen because it allowed the TSP participant the choice to the invest their own account among the, then, 3 or 4 different funds.

It seems to me that the fly in the ointment occures when TSP waits until the next morning to make purchases when, as what happend in 2007 in the I fund, where you had a very number of IFT in and out requests.

 

[nasa1974]

Actually my reading indicates that the "passive" feature didn't refer to participants at all. The term "passive," from my reading, referred only to TSP management investment approach.

"Active" investment referred to the regular approach most investors do to research a specific investments in order to make a financially sound choice. Whereas, investing by way of "indexing," or buying a statistically representative number of shares of say the Wilshire 4500, would allow TSP to broadly and passively invest, with little or not research into an index of funds to remove not only a significant degree of admistrative and research costs, but also remove the potential for politics (an important consideration) to enter into the TSP fund.

Additionally, proxy share votes held in the invested corporations are not acted upon. Another political avoidence measure. I'm not sure what benefit Blackrock may derive from the unacted proxy votes.

In fact, a major consideration of Congress' choice of the current plan, one of I believe it was 4 plans, was chosen because it allowed the TSP participant the choice to the invest their own account among the, then, 3 or 4 different funds.

It seems to me that the fly in the ointment occures when TSP waits until the next morning to make purchases when, as what happend in 2007 in the I fund, where you had a very number of IFT in and out requests.

Makes sense. Thanks.

 

[nsurf9]

If you haven't already seen TSP Talks' "TSP-Transfer-Limits" poll, please go follow the below thread and vote. It is not a commitment to "I'm in" just a quick measure of where we stand on the IFT limit issue.


TSP Transfer Limits

 

[PessOptimist]

bump

 

[Govt46]

I will commit to and support your efforts to repealing TSP -

 

[nsurf9]

Govt46, thanks for you're "I'm in" commitment.

As an update of our nailing down a legal opinion, I could not meet with the Virginia attorney due to my schedule, and he was in trial for the majority of trial last week. I am looking again to meet with him this coming week 3/5-3/9.

 

[nsurf9]

Update - I have an appointment regarding the TSP IFT case next Tuesday with the Virginia attorney. I'll update you on his consultation.

 

[nasa1974]

Update - I have an appointment regarding the TSP IFT case next Tuesday with the Virginia attorney. I'll update you on his consultation.

nsurf, Thanks.