By now, most of us know all about the trading limits in the Thrift Savings Plan. Just in case, here is a quick reminder:
In the TSP we get 2 Interfund Transfers (IFT) per month. After you've made 2 IFT's you can still move money into the G-fund, all at once or in small increments, as long as the IFT does not increase the allocation percentage of any other fund other than the G-fund.
IRA's are different. You basically have the opposite problem.
Most (if not all) IRA's do not allow margin accounts. Because of this there is a restriction put in place by the SEC that prohibits "free ride" trades.
Most transactions done with a broker require a 3-day settlement period. That means after you buy or sell a stock, ETF, fund, etc., the transaction does not settle for 3 days. Here is how that affects you:
If you buy stock ABC on Monday morning then sell it on Tuesday, you can actually buy another stock (XYZ) on that same day with the money obtained by selling ABC, but you cannot sell XYZ until Friday, when the sale of ABC will be settled. Otherwise you bought and sold a stock with money that was not in your account, hence the "free ride." This is a violation.
Your brokerage would usually give you a warning, but after 2 or 3 violations your IRA account can be suspended.
So, the TSP limits our buying but allows us to sell (G-fund IFT's) as often as we want.
In an IRA we can buy anytime you have money available, but your account can be suspended if you sell an investment that was bought with the proceeds of a sale that had not yet settled.
I hope this helps.
In the TSP we get 2 Interfund Transfers (IFT) per month. After you've made 2 IFT's you can still move money into the G-fund, all at once or in small increments, as long as the IFT does not increase the allocation percentage of any other fund other than the G-fund.
IRA's are different. You basically have the opposite problem.
Most (if not all) IRA's do not allow margin accounts. Because of this there is a restriction put in place by the SEC that prohibits "free ride" trades.
Most transactions done with a broker require a 3-day settlement period. That means after you buy or sell a stock, ETF, fund, etc., the transaction does not settle for 3 days. Here is how that affects you:
If you buy stock ABC on Monday morning then sell it on Tuesday, you can actually buy another stock (XYZ) on that same day with the money obtained by selling ABC, but you cannot sell XYZ until Friday, when the sale of ABC will be settled. Otherwise you bought and sold a stock with money that was not in your account, hence the "free ride." This is a violation.
Your brokerage would usually give you a warning, but after 2 or 3 violations your IRA account can be suspended.
So, the TSP limits our buying but allows us to sell (G-fund IFT's) as often as we want.
In an IRA we can buy anytime you have money available, but your account can be suspended if you sell an investment that was bought with the proceeds of a sale that had not yet settled.
I hope this helps.
Last edited:
