TSP officials eye limits on trades

[SkyPilot]

How come FedSmith and Mike Causey are not asking if the L funds were really such a great idea, and surveying regarding the cost of the L funds and should they be repealed?

 

[weatherweenie]

Here's a link to the Causey article, if anybody needs it:
http://federalnewsradio.com/index.php?sid=1238113&nid=22

 

[SkyPilot]

OPERATIONS BEGIN UNDER NEW THRIFT SAVINGS PLAN RECORD KEEPING SYSTEM​

Washington, D.C. (June 16, 2003) — The Federal Retirement Thrift Investment Board announced that its new daily valued Thrift Savings Plan (TSP) record keeping system went into production at noon today. Account histories for more than 3 million TSP participants have been migrated to the new database, while new contributions and loan payments made via payroll deduction since the beginning of June have been accepted, invested, and recorded in the new system. Other functions such as interfund transfers and the disbursements of loans and withdrawals will now be performed in the new environment.

The transition to the new record keeping system was the main topic at the regular monthly meeting of the Board members today, and was viewed by Chairman Andrew Saul and Executive Director Gary Amelio as both the achievement of a long-sought goal and the beginning of a new era of improved participant service. Saul congratulated the project management team led by the Board’s Director of Automated Systems Larry Stiffler, as well as the contractor team led by Materials, Communication & Computers, Inc. (MATCOM) of Alexandria, Virginia. According to Saul, “When I and the other new Board members arrived last November, we and the remaining veteran Board members carefully reviewed the situation and concluded that the staff and contractor teams were capable of completing the task. Today we have learned that our confidence was well placed.”

Amelio, who just this month began his service as Executive Director following a long career in the private sector, noted that the new system compares very favorably to what private sector plans offer to their participants.

“The daily valuation, timely processing of interfund transfers, loans, and withdrawals, and efficient Web-based functionalities available in this system rank with the best of what other plans have to offer,” Amelio stated. “When combined with the historically low TSP administrative expenses, those who voluntarily participate in the Plan will get the best of both worlds.”

 

[SkyPilot]

Here's the address to write and express your concerns regarding this issue. I spoke to a staff person, and they told me there were not figures available for costs of IFT's for individuals or L funders, but if I would write them and ask for this information, they would see what they could do. They were also aware of the Causey article and the flap that was brewing.

Now is the time to write and begin to help shape the upcoming debate!

FTRIB (Federal Thrift Retirement Investment Board)
1250 H St. NW
Washington DC, 20005

 

[BeaverState]

The agency I work for with roughly 40,000 employees was told by TSP that they would have to fund TSP an additonaly 27 million dollars this next fiscal year. This comes out to about $675 per employee. I not sure what was meant by this figure but I'm fairly assured it must be accurate since the comment was made by the Director of the agency when he was discussing employee costs and other budget items in a informational talk he was giving.

 

[BeaverState]

The agency I work for with roughly 40,000 employees was told by TSP that they would have to fund TSP an additonaly 27 million dollars this next fiscal year. This comes out to about $675 per employee. I not sure what was meant by this figure ....

Hey I'm answering my own question. I found it on the TSP website. Here it is.....
Among civilian TSP participants, only FERS employees are entitled to receive agency contributions. If you are a FERS employee, your agency makes two different types of contributions to your TSP account as part of your FERS benefits. These contributions are not taken out of your pay, nor do they increase your pay for income tax or Social Security purposes.
First, when you become eligible for agency contributions, your agency will automatically contribute to your TSP account an amount equal to 1 percent of your basic pay each pay period. These are your Agency Automatic (1%) Contributions. You will receive these contributions whether or not you contribute your own money to your TSP account.
Second, if you are contributing to your TSP account, your agency also makes Agency Matching Contributionsonce you are eligible for them. If you do not contribute your own money, you will not receive Agency Matching Contributions. Matching contributions apply to the first five percent of pay that you contribute each pay period. Your contributions are matched dollar-for-dollar on the first three percent of pay you contribute each pay period and 50 cents on the dollar for the next two percent of pay. Your agency will not match the contributions that you make above five percent of your pay. However, you will still benefit from before-tax savings and tax-deferred earnings on those contributions

 

[SkyPilot]

The agency I work for with roughly 40,000 employees was told by TSP that they would have to fund TSP an additonaly 27 million dollars this next fiscal year. This comes out to about $675 per employee. I not sure what was meant by this figure but I'm fairly assured it must be accurate since the comment was made by the Director of the agency when he was discussing employee costs and other budget items in a informational talk he was giving.

That seems to run contrary to the published statements saying that the thrift was becoming less expensive to operate, not more. I think your speaker must have had bad info.

It is my understanding that TSP is not "funded" at all, but ratherer, operates on a budget comprised of percentage of TSP assets.

 

[Fivetears]

If this plays out, our MB community and investment tactics will be squashed. They are going to force the L Funds down our throats. Y'all hide & watch.

 

[KCinKC]

The TSP Executives are into Socialism big-time! :notrust:They think we have no brains and cannot manage our own, earned money.

 

[robo]

More Funds are taking this position. Last year they did the same thing to my Wife's 401K. The comments below are from her account.

Beginning June 1, 2006, the Capital Accumulation Plan limits each participant to ten (10) investment fund transfers in any rolling twelve-month period. You have executed 9 investment transfer(s) within the last twelve months beginning June 1, 2006.

Only one left!





Excessive Trading Policies Target Market Timing


By Jim Durning

Your workplace retirement savings plan has a long-term objective: to help you acquire the financial resources necessary to sustain your preferred lifestyle after you stop working. While that goal can be described and pursued in many different ways, typically at its fundamental strategy emphasizes consistent, long-term savings behaviors.

The majority of those who save for retirement by investing in mutual funds through a retirement plan such as a 401(k) or 403(b) act in a manner consistent with long-term investment objectives. However, while they are definitely in the minority, other investors may engage in frequent or excessive trading - buying mutual fund shares, and then selling them quickly, even as soon as the next day - in an attempt to capitalize on short-term movements or pricing disparities in the market.

Adverse effects
Short term and other frequent trading by shareholders can adversely affect a fund's performance by disrupting the portfolio manager's investment strategy, by increasing expenses (such as trading commissions), or allowing some investors to capitalize on stale pricing at the fund's expense.

Efforts to combat market timing have increased among workplace retirement savings plans nationwide. According to a study by the Committee on Investment of Employee Benefit Assets (CIEBA), about 70% of large 401(k) plan sponsors have taken action to control market timing in their plans, and an additional 14% of plan sponsors intend to address the issue in the near future. "The survey demonstrates that sponsors of large workplace retirement savings plans have taken the issues of market timing in defined contribution (DC) plans very seriously," noted Gary Glynn, chairman of the CIEBA.

Fidelity policies
Fidelity Investments continues to enhance its systems, policies, and procedures regarding excessive trading, consistent with industry-wide efforts to ensure fairness for all mutual fund shareholders and to curb market timing. To help protect the interests of fund investors in collectively seeking long-term returns on their investments, Fidelity monitors excessive trading and limits the number of times investors move in and out of its funds, as well as other investment products offered as options in workplace retirement savings plans as directed by the fund managers or sponsors of the retirement savings plan.

Fidelity's monitoring is based upon the concept of a "roundtrip" within a fund. In retirement savings plans, a roundtrip transaction occurs when a participant exchanges in and then out of a fund option within 30 days.

For the purposes of its excessive trading policy, purchases and sales do not include systematic contributions or withdrawals (i.e., regular contributions, loan payments, hardship withdrawals) as permitted by the plan, they only include participant-initiated exchanges greater than $1,000.

Under the excessive trading policy, participants are limited to one roundtrip transaction per fund within any rolling 90-day period, subject to an overall limit of four roundtrip transactions across all funds over a rolling 12-month period.

The first roundtrip in any fund results in a warning letter. Participants with two or more roundtrip transactions in a single fund within a rolling 90-day period will be blocked from making additional purchases of the fund for 85 days. Any four roundtrips in one or more funds in a 12 month rolling period will result in the participant being limited to one exchange day per quarter for 12 months. This applies to all investments subject to the excessive trading policy. Once the 12 month exchange limitation expires, any additional roundtrip in any fund in the next 12 month period will result in another 12 month limitation of one exchange day per quarter.

Fidelity continues to reserve the right, but does not have the obligation, to reject any purchase or exchange transaction at any time, as provided for in prospectuses and other governing documents for its mutual funds and other investment products. Fidelity continues to reserve the right to amend its excessive trading rules in the future.

While the implementation of these excessive trading rules for Fidelity mutual funds begins in December 2004, application of the rules to other products may occur at later dates to be determined in the future.

Trading suspensions do not restrict a retirement plan participant's ability to make loan repayments, transact withdrawals from plan accounts, make investment exchanges out of the fund, or continue to allocate employee and employer contributions to the fund. In other words, the right to redeem is not affected by these policies, but the ability to make subsequent exchanges into the fund will be.

Continuous improvement
While Fidelity believes that the combination of fair value pricing, redemption fees (on certain funds), and account level monitoring described above is effective in limiting excessive shareholder trading activity in the Fidelity funds, the firm is always looking for ways to improve its processes. Fidelity has made a number of changes over time in developing the current procedures and Fidelity fund investors can be assured that the firm expects to make changes in the future as opportunities for improvements and new developments arise.

Fidelity serves more than 10 million people who are saving for retirement through their workplace retirement savings plans. The policies implemented to control disruptive trading are intended to protect the long-term best interest of the majority of those investors from the potential negative effects of the smaller number of investors who trade disruptively.

Before investing in any mutual fund, please carefully consider the investment objectives, risks, charges, and expenses. For this and other information, call Fidelity at 1-800-343-0860 or visit www.fidelity.com for a free prospectus. Read it carefully before you invest..

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Jim Durning is editor of Connections, the Fidelity Investments magazine for employers

http://wps.fidelity.com/401k/Excessive.html