TSP board to limit interfund transfers

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Wouldn’t it be nice if this whole thing blow up in the boards face?
By that I mean, we beat this thing and they are forced to stop their BS but because of all the hoopla they started those in the plan who have never been active for one reason or another were to start and the 3000 grow to 30,000 or 50,000.
 
Eldritch Flatus said:
Please excuse me for being the slow kid on the block (I'm only 63), but if I stay in the I fund and 'rebalance' my account every nignt so I always have the same no. of shares in it, would that be considered frequent trading? If not, how is that different than moving money from one fund to another? Also, if that is 'frequent trading', how in the heck is that different than the L-fund rebalancing every night.:confused: This has been nagging at me from the begining of this mess and I think I finally found the words to express it. Or do I just not get how any of this works?:laugh::o
Click to expand...

kinda beat me to it, EF. What if I like 50 S / 50 I? I have to 'rebalance every night to maintain that balance, unless they both perform identically that day.
I.e., I (me) was 50 S / 50 I yesterday, and am now 50.20% S / 49.80% I today and need to 'rebalance' by noon today to get back to 50/50 S/I. Need more L funds such as L50/50 (S/I)??
 
Aviator guy-

the TSP website has listed "questions and answers" on their website at this address:

http://www.tsp.gov/faq/faq14.html

It may work for you. If not, go to TSP.gov, then click on site map, then click on FAQs. It's down in there buried.

Don't take this laying down. Join the fight by subscribing to http://www.tspshareholder.org
and join those who are fighting the good fight.

And sign the petition (available as link off tspshareholder.org)


You are an aviator? Good. Chart a new course. Turn left, heading 090, on-course to telling them exactly what they can do with trading limits. Maintain visual separation, climb and maintain the high ground.

Let's go gett'um.

We ARE organizing. We've gone from 3, to 13, to 30, to 300 in the first 72 hours of our new website.

http://www.tspshareholder.org

We are spreading the word. Get your co-workers to log on as well.
 
Perhaps this Congressman would agree with our point-of-view.


Reference:


http://www.investmentnews.com/apps/pbcs.dll/article?AID=/20071211/REG/71211006


401(k)s not enough for young workers
By Sara Hansard
December 11, 2007
Young workers just entering the workforce will only save enough money in their 401(k)s to replace 22% of their pre-retirement income, according to a Government Accountability Office report released today by House Education and Labor Committee Chairman George Miller, D-Calif.OAS_RICH("Middle");Thirty-seven percent of workers born in 1990 will reach retirement age in the 2050s with no savings at all in a 401(k)-type account, according to the report.
The report highlights the need for prompt action, said Mr. Miller, who requested the GAO report.
“Unless we act now, too many workers just starting their careers today will unfortunately face a less secure retirement than did many of their parents,” Mr. Miller said.
Mr. Miller has sponsored a bill requiring better disclosure of 401(k) fees as well as a mandate that a low-cost index fund be included in all 401(k)s.
The current median 401(k) account balance is $22,800, according to the GAO report.
Among workers aged 55 to 64 with 401(k) type retirement savings plans, the median account balance in 2004 was $50,000, the report found.
That would provide annual income of only $4,400 a year, replacing about 9% of income, on average.
The GAO report suggested that workers should be able to participate in 401(k)s or other retirement savings plans as soon as they start a job, and it suggested that retirement savings be automatically rolled over into new retirement plans when workers leave jobs.
The report can be found at: http://edlabor.house.gov/publications/401k-GAO-Report-Low-Savings.pdf .
 
"But Tracey Ray, chief investment officer of the TSP, said that under such a plan, a small fee of $8 or $9 wouldn't begin to offset trading costs. Instead, some participants might have to be charged thousands of dollars in fees, depending on the amount and size of their trades."

Can somebody break this down in layman terms? What are the administrative cost and why could they be thousands of dollars? I thought that they gathered all the IFT information and moved it all at once at the end of the day. One click of a button. Isn't "size of their trades" only one for everyone? Is there that much of a difference if it is 200k to 500k being moved?
I know there are a lot of questions here, but if anyone has any insight on these or if you can direct me to a post that I might have overlooked, I would appreciate it.
 
It seems reasonable to lump all the accounts into one block trade, but then barclays couldn't get what is essentially a comission on each account trade.
(just my presumption, I could be way off base)
 
If there were 3000 of us IFTing, your saying that they get a commission on 3000 IFTers and not the amount in each IFT? humm. Interesting.

FUTURESTRADER said:
It seems reasonable to lump all the accounts into one block trade, but then barclays couldn't get what is essentially a comission on each account trade.
(just my presumption, I could be way off base)
Click to expand...
 
Barney said:
If there were 3000 of us IFTing, your saying that they get a commission on 3000 IFTers and not the amount in each IFT? humm. Interesting.
Click to expand...

I'm sure there is some percentage per account that they receive. And/or percentage based on total funds under management, all in their contract (in fine print). Barclay's are pros in a fast paced, cut-throat business. Uncle Sam has always been a feeding trough.

If the 3,000 all bail out of the I fund on one day, Barclay's will have to sell at a discount because they may not be able to get filled at the same price for all those 'shares'. Barclays 'might' average the price of several blocks of trades for the I fund.
 
anidoc said:
According to TSP website and other info, the IFT's are all done in one block trade at the end of the day. That's why we have to do it before noon and we get COB pricing, instead of time of IFT pricing.
Click to expand...

This is what I thought. But their pricing idea does not add up. If 3000 people average 10 IFT's a month (just a figure), the board says the admin cost are enormous. So they want to limit it to two IFTs per month. So that is roughly 6000 IFT's just from the 3000. Now, as more people become aware of sites like TSP Talk, and learn about their retirement ability, they will join in to maximize their money too. What happens if 3000 turns into 6000 or 10000? What if 1 million of the 3.8 million people decided they wanted to maximize their retirement? That is 12,000/20000/2 million respectively IFTs per month. Will the TSP board go back to only allowing an IFT every quarter? Thanks for letting me vent! I guess this is rhetorical.:blink:
 
"We felt the two trades a month allows flexibility for everyone and the ability for everyone to go into the G Fund if they get scared," Ray said. "A percentage fee is certainly an option, but we felt that would hurt the nonfrequent traders."
Click to expand...

I don't know about her but I don't transfer to the G Fund because I'm scared. I do it when I see an upcoming decline in equities. I don't make emotional responses with my money just because some talking heads like Jim Cramer screamed "run!".
 
The government's retirement plan
Congress' retirement plan is covered by the thrift savings plan, "sort of the federal government's 401(k) plan," Graff explains. "And they're very proud of the fact that the fees in the thrift savings plan are extremely low. Some describe it as only 6 basis points to run the thrift savings plan. And they don't understand why the rest of the world can't operate on just 6 basis points."
Mind you, 6 basis points is equivalent to 0.06 percent, or six hundredths of 1 percent. This is about half the cost of the cheapest index fund available to individual investors in the marketplace. Graff says the rest of the world can't operate on a fee that tiny, in part because businesses have to comply with ERISA -- those massive federal regulations that require plans to follow certain protocols. Costs for small business plans are higher than those of the single largest employer plan in the world, which enjoys certain economies of scale.
"For small plans, fees and expenses tend to be higher as a percentage of assets than for large plans," explains Fred Reish, an attorney with Reish Luftman Reicher & Cohen. "That's because many of the same services need to be provided to small plans, but they have less money by definition."
Reish, who specializes in employee benefits law, says that similar-size plans should be charged about the same amount, and the prices should be reasonable. But "reasonable" is more of a range than an absolute number.
"The problem is that, by and large, many providers in the 401(k) marketplace do not give clear and complete information to plan sponsors," he says. Plan sponsors, for your information, are employers who offer retirement plans to their workers.

http://finance.yahoo.com/focus-reti...tFw0NjWfaLFE4MKpxJZG7YWsA?mod=retirement-401k

It still amazes me how many show such a lack of concern for their fund accounts. "I just contribute every payday" blah bla blah and don't even show interest in managing their own account. I try... some listen.
 
BooDog said:
The government's retirement plan
Congress' retirement plan is covered by the thrift savings plan, "sort of the federal government's 401(k) plan," Graff explains. "And they're very proud of the fact that the fees in the thrift savings plan are extremely low. Some describe it as only 6 basis points to run the thrift savings plan. And they don't understand why the rest of the world can't operate on just 6 basis points."
Mind you, 6 basis points is equivalent to 0.06 percent, or six hundredths of 1 percent. This is about half the cost of the cheapest index fund available to individual investors in the marketplace. Graff says the rest of the world can't operate on a fee that tiny, in part because businesses have to comply with ERISA -- those massive federal regulations that require plans to follow certain protocols. Costs for small business plans are higher than those of the single largest employer plan in the world, which enjoys certain economies of scale.
"For small plans, fees and expenses tend to be higher as a percentage of assets than for large plans," explains Fred Reish, an attorney with Reish Luftman Reicher & Cohen. "That's because many of the same services need to be provided to small plans, but they have less money by definition."
Reish, who specializes in employee benefits law, says that similar-size plans should be charged about the same amount, and the prices should be reasonable. But "reasonable" is more of a range than an absolute number.
"The problem is that, by and large, many providers in the 401(k) marketplace do not give clear and complete information to plan sponsors," he says. Plan sponsors, for your information, are employers who offer retirement plans to their workers.

http://finance.yahoo.com/focus-reti...tFw0NjWfaLFE4MKpxJZG7YWsA?mod=retirement-401k

It still amazes me how many show such a lack of concern for their fund accounts. "I just contribute every payday" blah bla blah and don't even show interest in managing their own account. I try... some listen.
Click to expand...

Good find.

We need to get ahold of Graff. He's a DC power guy. If we can get him on our side, we'll be helped with our cause.

I'll work on that tonight.
 
Alright everybody- listen up!

We're talking amongst the moderators as to the best plan of attack here.

We'd like to have a unified voice- and we are debating putting up some options on a TSPTALK poll and have everyone vote on it.

Basically, what I am thinking is this: Put out a couple choices that we would like to support, and then taking a vote. Whatever choice wins, then we all try and write in comments in support of that choice. I can do up graphs and supporting data to go with the choice we choose.

The first option that I am thinking of, is to ask them to charge a $10 per IFT fee. That way, the fee would generate in the neighborhood of $24 million per year- far in excess of the expenses now being run up. At the end of the year, any money left over can be distributed to all TSP shareholders equally. That way, anyone who moves little would not be out much, those who move frequently would pay "their fair share".

Or it could just be a flat fee, without the rebate clause.

or

2. Put the limit ONLY ON "I" fund IFT's, as that is where the higher costs are.

or

3. Ask them to reprice at 7.a.m the next morning instead of 7 pm. the evening before, thereby negating the costs when they miss. It still would be within SEC guidelines.

Can anyone else think of, offer, an alternative that they would like to see put up in a TSPTALK Poll to vote on as a central idea that we can all support, and flood the TSP Board with supporting comments?

What are your thougths?

THIS IS NOT OVER YET.

Your turn: Comments?
 
James and all, I have 2 suggestions-a "what" and a "how to".

The "what"...propose flat fee per move for additional moves in/out of I above or beyond 2x/month. That would be in line with the 2x solution these folks already have their hearts set on-it's hard to push a juggernaut completely offtrack you know (as in my mind's made up don't confuse me w/the facts), but you can nudge it a little to one side. Combine that fee proposal with the proposed 7am timing for repricing, as opposed to an either/or. Why force them to choose? the repricing is a great idea anyway, but way out of line with their current thinking-would be hard to get them to give it a fair shake unless linked to something closer to what they think they want.

The "how to". My agency has an extremely strong history with appeals and litigation going back decades (my 20 years anyway). Based on that, one lesson on how to make a bigger impact....DO NOT send form letters or emails! They end up counting as 1 comment letter total, even if there are 20,000 separate sends of the same thing! Write your own letter in your own words every one, even if we all support the same option, try to make the surrounding verbiage different, even tho wrapped around the core concept(s). There, nuf said, I can go with whatever the advisory group as a whole settles on as a counter proposal.

Last comment-the (first) proposal for flat fee every single move anyone makes-would go down in flames IMHO-they'd have to work too hard at explaining to every TSPer out there why such a move would not impact them any more than the current expense ratio already does. AND we'd have to work to sell that concept with actual calculated expense estimates to minds already really closed rock hard.
 
Note:

I spoke with Megan at the TSP Board office this morning. I called yesterday to ask why the Board minutes and data from January (December's actual trading cost numbers) had not been posted yet.

Megan told me that they "forgot" to post them on the website, and they asked IT to upload it today.

We'll see.
 
Personally, after reading the Federal Register notice, I'd vote for doing a combination of #1 and #3 ($10 per IFT and move the Share Price calculation time to 8 am EST).

Reasons: The Federal Register notice goes into great detail to show that the I-fund timing issue is a large part of the cause of their distress. (I'm know it is unfounded and that long term it should even out but it will be too big of a battle to educate folks in time.) #3 addresses directly that concern. It is also FAIR and we all know how UNFAIR the current FV's are. Barclays is a very poor guessers. Also, whathisname has said they would be willing to accept another good idea if it popped up. They have never addressed this proposal to my knowledge. I know I sent it in as a suggestion. They have directly addressed the $10 fee idea and also addressed it in the Federal Register. If you suggest that, they will say that it has already been considered and will dismiss it. By putting forth #3, we will force them to evaluate it as an option.

I suggest the combination with #1 because of the arguement that it will help defray any cost that trading presents. It adds more cost to those who do frequent IFTs and the pool of money can be used as an offset. It gives the illusion that the "frequent traders" are paying for the drag they are causing. (Again, I don't agree with their arguement but think that it is better to address the concern in some manner and that convincing people otherwise is too much of an uphill battle.)

An important point that the board has failed to address is the fact that people will still move as a group when big corrections occur. February/March of 2007 is a good example. We jammed the phone lines transferring our money. It can't be just the frequent 3000 that caused that. These events will still cause FVs too occur and when those are big enough they are a huge cost to the sheepeople who are buy and hold. Changing the calculation time for share price will kill two birds with one stone. It is a more forward thinking alternative.

I personally think that #3 alone is the best option to solve a real problem (the FV) and at the same time addresses the boards concern.
 
Note:

I just received the fax back from Megan with the data on December's trading costs. I'll be able to write up something tonight- but suffice it to say that F, C and S costs were minimal. Once again the I fund is the expensive one.

If anyone out there is still IFT'ing in and out of I, then PLEASE use C or S instead.

Costs for IFT's in december:

F Fund: $35,282 1 basis point.

C fund: $97,845 1.1 basis points.

S Fund: $-23.574 -0.4 basis points (Yes, negative trading costs for S )

I Fund: $759,987 5.8 basis points.


Folks- it is mighty hard to fight this fight- but the "I" is the issue for them, and it's hard to argue that. They claim they don't know why we would use "I" fund. Everyone here knows it's because you can get larger swings in the "I", but they don't care about that.

For the year, here are some numbers to think about:


F- $8,735,859,214 traded.
Cost for the year for all trades: $1,085,881 1.2 basis points.


C - $11,118,101,427
Cost for the year for all trades: $605,434 0.5 basis points

S- $13,693,147,225
Cost for the year for all trades: $ -4,324,671 -3.2 basis points
(yes, that's a NEGATIVE trading cost of four milion dollars to trade 13 BILLION dollars over the year )


I- $26,732,802,960

Cost for the year for all trades: $16,513,454 , or 6.2 basis points.



Cost for trading the " I" is twelve times the cost for the year, basis points wise, the cost for trading the "C".

Just food for thought.
 
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