Promo to stop TSP withdrawal at retirement

[uscfanhawaii]

Have you noticed the big new campaign on the TSP website to try to get retirees to keep their $$ in TSP?
I don't know why, but this really irritates me. Why is a govt agency trying to PERSUADE TSP'ers to leave their $$ in TSP, instead of just giving the plusses AND MINUSES so that investors can make their own informed decisions. What's in it for the TSP?!
I wrote a mssg to them expressing my concern, and giving my reasons for why I intend to remove my $$ from TSP when I retire! They really need to address the (poor) withdrawal options for retirees. :soapbox:

 

[alevin]

Hmm, might it be that the amount of G-fund borrowing they've been doing, would not be possible if people start doing wholesale withdrawals of their tsp accounts?

 

[Valkyrie]

The Thrift Savings Plan was established by Congress in the Federal Employees’ Retirement System Act of 1986 for federal employees and members of the uniformed services (including the Ready Reserve). It is administered by the Federal Retirement Thrift Investment Board, which is an independent government agency managed by five board members and an executive director appointed by the president.


being independent, they are not directly funded, I presume. their board members and director are political appointee hacks and they have financial ties to the company/ies that manage the funds. with the two moves a month they make the money the TSP govt employees do not.

 

[Frixxxx]

The promo I saw just talks about those who leave, not retire.

There's another video about the construct of the FERS retirement.

I just wish they would teach how to plan more for employees.

 

[FogSailing]

Well, one thing is obvious from our posts....if they intended to do anything to make TSP work better for Feds, we've all somehow missed it...

I think the system was more than adequate when it was developed 30 years ago but it needs an evolutionary update. I've made my points known to them on several occasions but have never seen any of the things we all want (more Fund options, more IFTs, better time to make IFTs) ever considered and most definitely never supported. I think they are doing a less than adequate job for Feds given todays world.

FS

 

[uscfanhawaii]

Well, one thing is obvious from our posts....if they intended to do anything to make TSP work better for Feds, we've all somehow missed it...

I think the system was more than adequate when it was developed 30 years ago but it needs an evolutionary update. I've made my points known to them on several occasions but have never seen any of the things we all want (more Fund options, more IFTs, better time to make IFTs) ever considered and most definitely never supported. I think they are doing a less than adequate job for Feds given todays world.

FS

The items you mentioned are definitely ones we wanted, and still have not received, for adding to our accounts. But my current concern (since I am getting close to retirement) is on the WITHDRAWAL side of TSP.

I apologize in advance for the length of this post, but thought some others in my situation (approaching retirement and considering whether to take all funds out of TSP and transferring to an IRA) would be interested. Here is my email to TSP, and their response:
To TSP:
"This is in regards to your recent promotion to 'stay in the TSP' after retiring.
I find this to be more of an ad campaign than an informational message. You should give all the info regarding options...benefits AND disadvantages. TSP is NOT a private enterprise, so you should be trying to HELP feds made good decisions rather than try to PERSUADE them to make a decision that may NOT be in their best interest.
Yes, the admin costs are low. But there are outside funds that are low also. Vanguard, for instance, has funds that run the gamut high to low....the low ones typically being funds similar to the TSP. But with WAY more variety and flexibility.
Rather than put out an ad campaign, why not make the TSP better so people recognize the advantages and WANT to stay in? The TSP as it stands is EXCELLENT for putting $$ in, not so much for withdrawal.
IMPORTANT SUGGESTIONS TO IMPROVE TSP WITHDRAWALS:
1. Allow unlimited withdrawals after 59 1/2. Outside accounts allow this, why not TSP? Even if still working!
2. Allow Roth funds to be withdrawn SEPARATE from Traditional funds. Taking them out in equal proportions defeats the benefit of Roth. Need to take out Roth when tax rate is high, Traditional when tax rate is low.
3. Allow separate fund allocations for Roth and Traditional. I prefer to have my Roth funds in more 'risky' investments to attempt to get a higher return than my more 'conservative' Traditional balance.

In conclusion, Thank You for 35 yrs of TSP investing, but as I get ready to retire, as it stands now, there is no question that I will take my (hopefully by that time) $1 Million OUT OF TSP. Unless you can fix the withdrawal situation."

Response from TSP:
"Thank you for writing and providing us with valuable feedback about the features you would like available. Participant feedback helps us refine and improve the TSP participant services.
The Federal Retirement Thrift Investment Board has elected to proceed with a project to adopt changes to withdrawal rules; however, such changes are goals that will require legislation. Congress, in law, has provided the TSP's withdrawal options. Therefore, Congress will need to enact laws to change them. While Congress is generally receptive to recommendations to enhance the TSP, the process can, on occasion, be lengthy.

In 2014, the TSP conducted a study on the merits and methods of allowing in-plan Roth conversions as well as other changes associated with the Roth TSP feature (such as allowing participants to elect to withdraw traditional accounts and Roth accounts separately rather than pro rata as is currently required under TSP rules). The results of that study are under review. However, should the TSP elect to allow in-plan Roth conversions and/or other Roth-related changes, it will require significant reprogramming as well as significant changes to our communication materials. While this will not deter us, the TSP is charged with acting in the best interest of our participants and is always looking for ways to meet the needs of our participants; we likely will not be able to implement any such changes in the near future."

So it looks like nothing will change in time for me. Maybe the younger ones in TSP need to take up the battle now so it will be available to them in time! :scratchchin:

 

[burrocrat]

so basically the tsp board kicked the can into congress' court, who will the predictably (after a lengthy period of time) kick the can back to the tsp board with orders to conduct a study, which will of course take some time before they actually review the results of the in-house study over another lengthy period of time. then the tsp board will make some recommendations to congress who may or may not do anything. after that, if lucky enough to get some or all of the desired flexibility in the tsp accounts, it will require some programming changes and such. then we will have true freedom to manage our individual monies.

there is a reason tsp.gov is not in the private sector, they would be bankrupt and probably sued for negligence of fidicuary duty for handcuffing investor's access to a reasonable and timely trading platform.

i wonder how fast they moved when deciding to limit trades to two per month? shouldn't the money pipeline flow just as quickly in both directions?

 

[PessOptimist]

Thanks uscfan for keeping the dissatisfaction on the TSP board radar. Not saying that others are not doing that or others have not tried before or since. Might be saying some have given up beating the dead horse to try to get it to do something. Thanks to everyone who is trying to get FRTIB to listen.

PO

 

[James48843]

I want to know...how much TSP SHAREHOLDER MONEY is being spent trying to convince people, (who make their own informed choices,) NOT to move their money out where they have more flexibility.

Am I paying for that crap advertising?

 

[uscfanhawaii]

I want to know...how much TSP SHAREHOLDER MONEY is being spent trying to convince people, (who make their own informed choices,) NOT to move their money out where they have more flexibility.

Am I paying for that crap advertising?

Oh, I am sure they are being paid out of the 'low administrative costs' of TSP!

But I believe most TSP'ers will continue to take their funds out of TSP when they retire. So at least we will be voting with our $$.

I like alevin's note about the FEDs probably wanting the $$ to stay in TSP so they can tap the G fund when they need to (like EVERY YEAR!).

 

[burrocrat]

Am I paying for that crap advertising?

yes. tsp is a self-supported entity. tsp recieves no net money from taxpayers. funding comes from participants who pay administrative fees. currently greg long and the tsp board have decided to have blackrock administer the tsp, for a fee. i would be curious to know how often greg long and the tsp board meet with blackrock and get their lunch gratuitously paid for. that could probably be accomplished by looking at their official calendar. but that information is probably kept in msoutlook email, which is probably stored on a private server, which is probably kept in a political appointee's basement. pffft, at this point, what difference does it make, the dollar has already been destroyed?

 

[Frixxxx]

yes. tsp is a self-supported entity. tsp recieves no net money from taxpayers. funding comes from participants who pay administrative fees. currently greg long and the tsp board have decided to have blackrock administer the tsp, for a fee. i would be curious to know how often greg long and the tsp board meet with blackrock and get their lunch gratuitously paid for. that could probably be accomplished by looking at their official calendar. but that information is probably kept in msoutlook email, which is probably stored on a private server, which is probably kept in a political appointee's basement. pffft, at this point, what difference does it make, the dollar has already been destroyed?

FRTIB: Board Members

I wish that they would not pencil whip Mr. Long's position. TSP needs a change.

 

[anthony]

I don't think any of this stuff gets changed while most of us are living, given the current policy environment and expectations it will continue. So, my argument with TSP is for action on programs that they can actually change. What I really want to see is a change in auto-enrollment method and investor education. As I understand it from previous assessments, only a small percentage of TSPers actually take any time to educate themselves, think about allocation, and think about maximizing contribution. I'm not saying everyone should be like people on this board, attempting to time the market, unless they have lots of time to get smart on it and pay attention. Let's be real. We may say, "Friends don't let friends buy and hold," BUT ... about 80% of those on the tracker regularly underperform the C-Fund buy and hold approach. SO, theoretically to me, the overwhelming majority of TSPers would probably be better off dumping cash into Lifecycle Funds on a Dollar-Cost Averaging (DCA) approach.

Anyway, that's not what I'm referring to really, with regard to policy change. What I'm talking about is that the U.S., both federally and in corporate sector, has really switched over to defined contribution over defined benefit, especially by comparison with other developed nations. Whether or not you have something to help you live at a reasonable standard of living after retirement has now been pegged almost entirely to how you perform in the stock market. That would be all well and good if everyone was actually investing in the stock market, DCAing in money over the course of 50 years, educating themselves about allocation and so on. But they are NOT. A lot of 401k people, and especially TSPers, get enrolled automatically. However, they are auto-enrolled in G-Fund or equivalents, not in a stock fund, and they likely don't ever get close to maxing out IRS contribution limits. They get enrolled in a G-Fund, they set up automatic deposits to the matching fund level, then they forget it for the rest of their career, unless they get a good mentor and wake up at some point along the way. If they don't they probably retire with something like $300,000, all while a lot of financial advisors are suggesting something more like $3-4 million.

The TSP needs to do two key policy things in my opinion, which they may or may not be able to do with congressional approval:

1. Automatically enroll new employees in Lifecycle Funds suitable for a timeline where they retire at 70.
2. Significantly ramp up education efforts, especially stressing:
   • As you earn more money, invest more of it.
   • If government can't auto-enroll people in L-Fund because of regulations preventing them from exposing people to risk without consent, then ramp up education to emphasize the importance of being exposed to stocks early in life and dollar cost averaging through good times and bad.
   • Annual check-ups with a CFP, provided at government expense.

If the feds and corporations are all going to pin retirement income to performance in equities, then you have to think of getting them into the best fund options as a cost savings measure for America. If a large percentage of Americans aren't saving enough for retirement because they are sitting in G-Fund equivalents, then taxpayers are going to be shucking out a ton of cash to support them later in life when they can't do it on their own.

 

[PessOptimist]

You may have missed this:
https://www.tsp.gov/whatsnew/Content/index.html#lfund
L Funds: The new FERS default investment — (September 5, 2015) Beginning on September 5, 2015, the default investment fund for newly enrolled civilian TSP participants and new beneficiary participants will be an age-appropriate Lifecycle (L) Fund.This change is in accordance with Public Law 113-255, the Smart Savings Act, which the President signed into law on December 18, 2014.

PO

 

[anthony]

You may have missed this:
https://www.tsp.gov/whatsnew/Content/index.html#lfund
L Funds: The new FERS default investment — (September 5, 2015) Beginning on September 5, 2015, the default investment fund for newly enrolled civilian TSP participants and new beneficiary participants will be an age-appropriate Lifecycle (L) Fund.This change is in accordance with Public Law 113-255, the Smart Savings Act, which the President signed into law on December 18, 2014.

PO

Nice. Took them long enough. Wonder if they'll be able to convince others currently enrolled to do the same. I think I remember seeing somewhere that since the 2009, more than half of all TSP accounts have been in the G-Fund, and hence have missed the incredible gains over the last 6 years.

 

[userque]

I want to know...how much TSP SHAREHOLDER MONEY is being spent trying to convince people, (who make their own informed choices,) NOT to move their money out where they have more flexibility.

Am I paying for that crap advertising?

"Careful what you wish for." There's a way to go about things.

I believe the last uprising against the TSP didn't go so well. :blink: It takes much more work than basic protesting in this sort of situation--if one is really and truly serious and committed to changing things; and changing them safely, without making things worse (off the top of my head, A potential TSP response: "OK, you don't want us to cover expenses via advertising payback; we'll just attempt to increase your fees--no problem. [Or we'll cook the books even harder on the I-fund--no problem"]). IMHO.

 

[FogSailing]

Burro: Perhaps a class action lawsuit would be the correct tool to get changes implemented. However, in my opinion, Feds would need a single organization (like NARFE) to be willing to take point. They know DC, the politics, etc. and how to leverage a suit into meaningful results. There are many needed changes.

FS

 

[burrocrat]

in all honesty, i am not a big fan of lawyers, you can only trust them as far as you pay them, and i'm pretty sure our tsp pockets aren't the deepest. there are dogs, and then there are bigger dogs, this is a very important lesson to learn in life. when you're a dog, it is not always so productive to test the limits of your chain, instead get happy in your kennel. the self-dealing cheats will pay in the end, that is what the next holiday is all about.

as far as this holiday goes, i am thankful for:

* 2 trades per month digitally with confirmation (most times) instead of snail mail requests.
* 5 funds to choose from instead of just cash (even though f and i are rigged daily), buyer beware.
* that i am currently at 8% despite completely blowing august and september and taking a big kick to the retirement nuts as well as missing some gravy in November.
* that my mother-in-law is not coming over for dinner.
* that i don't even have a mother-in-law (told you i hate lawyers, once was enough).
* my relative health and every day that i draw breath.
* boobs (gotta have a hobby).

happy thanksgiving all.

 

[burrocrat]

i logged in to check my tsp.gov account and saw the big red "keep your money in tsp after retirement" add. they were kind enough to offer me a survey at the completion of my website visit so i told them what i thought in the "suggestions" box:

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"Offer real-time trades like a regular brokerage retirement account instead of 12:00 noon ET cutoff 4 hours before the market closes, how do you expect someone to buy something without knowing at the time of the transaction what the price is?

Offer unlimited trades like a regular retirement brokerage account instead the 2 IFT's per month, investors should have access to their money and available investment funds at all times. Many private brokerages offer these services with a wider variety of funds at competitive or lower administrative costs than TSP.

Hold individual investor's funds in trust to be accessed only by them, it is disconcerting that whenever the federal government runs into budget uncertainty that the U.S. Treasury 'borrows' from the G fund pool as a short term stop gap measure to pay the current credit card bills. How is this reconciled with the concept of fidicuary duty? That is a crime in any other private sector scenario.

The above limitations make the tsp an unwieldy, restrictive, and inflexible trading platform that hampers an account holder's ability to make timely and accurate decisions regarding their retirement funds.

I will be taking my funds out TSP.gov upon retirement and rolling them over to my private brokerage."

----------

i doubt they will read it let alone do anything about it, but if they do and decide to reply to me i expect the answer to go something like this:

tsp: the tsp funds seek to mimic the indices they represent and are not actual investment funds with real time prices, it takes time to administratively adjust account values by the end of the trading day (me in my head: so my tsp is invested in fantasy paper not real paper?)

tsp: trades are limited to keep costs down (me in my head: but costs have increased dramatically since instituting this rule! and private options have lower costs and more freedom.)

tsp: tsp investors have never lost money in the g fund, all monies have been replaced with appropriate interest (me in my head: great, that is like my brother telling me he used my girlfriend over a long weekend trip but brought her back safely so she is still there when i want her?)

tsp: we are constantly working to improve the investor experience and tsp.gov is one of the best employer sponsored retirement vehicles available (me in my head: well, you just keep working on that then there einstien because it looks like you're going backwards to me.)

 

[FogSailing]

I also took that survey and suggested similar things Burro. Everyone who is an active or retired Fed should take the 5 minutes needed to give these folks some feedback. At least they won't be able to say they didn't know what their customers thought.

FS