TSP Transfer Fees and/or Transaction Limit Discussion

[SkyPilot]

Re: ebbnflow's Account Talk

Before I threw my opinion out there on whether or not additional fees would be fair, I'd like to know more about how exactly TSP is run behind the scenes. Exactly how many people are there employed making these transactions, handling paperwork, etc? Have they needed additional people to cope with all our transfers? Has someone ever posted an article or a link with that sort of info in it?

FRTIB states on their home page that they have a staff of 80. I don't suppose this would include the contracts that TSP has let to handle some of the actual work as well.

I have also read that in response to emergency planning intiatives, they have added server support to handle the traffic that could be generated if there were to be another 9/11 style crisis in which there were a massive IFT to the G fund.

http://www.frtib.gov

 

[anthony]

I think to some extent our arguments are falling on deaf ears with the Thrift Board and Mr Causey. I will write a letter expressing some concerns, but will direct it to my Congressman and Senator instead (and not without some hope that they are enrolled in TSP as well).

I think the worst part of this is the people who cause it. $1.7B in trades out of stocks in March means thousands of ignorant lemmings dove off the cliff after it was already too late and they should have been holding on for the ride. I can't wait for the 4th Quarter numbers. I could understand better if thousands of educated investors transferred all their G and F Fund shares into stocks to take advantage of a market bottom, but I have to assume that a very small percentage of TSP participants meet that description.

If they started charging fees or returned to the once-a-month transfer limits, I know one certain thing. The day I left the military, I would roll my entire TSP into a self-directed Traditional IRA and I would plot my own course with carefully selected low-expense no-load mutual funds that consistently outperform the market and would include some carefully selected value stocks to boot.

If we were forced into a compromise I think the fee should increase incrementally by trade activity level, while maintaining daily capability. There's usually only ~20 trade days a month right? So for example, the first 0-5 transfers could be free, 6-15 transfers charge 0.01%, and 16-20+ are 0.02% of the transaction value, or something. Don't worry this part won't be in my letter!


p.s. - 12% I'm digging those new socks you're sportin'!

 

[anthony]

okay, disregard my sample percentages - even 0.01% would be rape. But you get the idea, yeah? ... some incremental approach if we had no other option.

 

[FogSailing]

I posted a message on Mike Causey's website last night. It was simple..went something like this..

Mr. Causey, I don't agree that federal employees need to pay fees for using the interfund transfer system. My guess is that is you conduct a real poll you'll discover that the majority of us are fine without additional fees.

Regards All,

FS

 

[12%ayear]

I posted a message on Mike Causey's website last night. It was simple..went something like this..

Mr. Causey, I don't agree that federal employees need to pay fees for using the interfund transfer system. My guess is that is you conduct a real poll you'll discover that the majority of us are fine without additional fees.

Regards All,

FS

Causey has no power over the TSP. It is just his 2 cents like ours. I would not waste my time with responding to him and giving him credit. The guy should just shut-up.

 

[SkyPilot]

Causey has no power over the TSP. It is just his 2 cents like ours. I would not waste my time with responding to him and giving him credit. The guy should just shut-up.

However, Mr. Causey is the prominent media voice regarding federal employee issues in the single largest federal employee market (Washington D. C.). So, to let his opinions be voiced without challenge is to acquiesce, and opinion left to stand on it's own without being refuted becomes perceived fact.

If we do nothing, we only have ourselves to blame for the outcome. And, if he should look into the issue further and gain understanding, he would not be a bad ally to have.

Politicians are media sensitive...

 

[wv-girl]

However, Mr. Causey is the prominent media voice regarding federal employee issues in the single largest federal employee market (Washington D. C.). So, to let his opinions be voiced without challenge is to acquiesce, and opinion left to stand on it's own without being refuted becomes perceived fact.

If we do nothing, we only have ourselves to blame for the outcome. And, if he should look into the issue further and gain understanding, he would not be a bad ally to have.

Politicians are media sensitive...

I am sure Mr. Causey has his own agenda...i.e. Headline goes something like this ...."evidence of more waste of time, money etc....by govt workers...hrs spent on ..... much like researching costs of paper clips.....and screw-drivers ...add nauseum". Although it is our $, everyone seems to know best on how we are to spend it.

As for the other tsp gov't folks that have started this mess about fees, etc.... If the L funds re-calculation formulas are done automatically, surely one has to believe the other funds can also be automatic. I am sure that the only thing those folks in Alabama are doing is data entry per fund. They should consult "our experts" on how it can be done via per person per ift.

IMO----Someone at tsp.gov has been put on the hotseat as to having to justify keeping current employees since they run such an efficient program as to have the lowest fees anywhere for their funds. Fed employees have always lagged behind the private sector in pay, etc. and gov't has promised to downsize....yak, yak, yak. Now some of the agencies are doing the 'A-76' studies, or have done, or in process of competing our jobs to outside contractors. At NIH this is like the 4th or 5th year, and each time, no matter what job series is being competed, gov't employees have won the bids. Meaning we are doing more work for the same pay and doing it more efficently for lots less than private sector contractors. But Uncle Sam still wants to waste more $ doing more and more of these 'A76' studies.

Anyway, you get the point. Tsp.gov needs to show and justify the 80 current positions they currently have.

Enough soap box for now.


My 2 cents
Debbie

 

[jeburnside]

I sent my letter in. IFT fees would kill my profit margin.

Jimmy

 

[Show-me]

I sent my letter in. IFT fees would kill my profit margin.

Jimmy

Thanx for sending the letter and welcome to the mb. Good luck with your investing!

 

[FundSurfer]

I know I've said this before but I want everyone to understand why the TSP board is concerned about fees. The fees have VERY LITTLE to do with the actual cost of trading stocks and ZERO to to with the current problem. The problem has EVERYTHING to do with the FV.

Large numbers of moves into and out of the I-fund with a poor FV guess either cost a lot of money or makes a lot of money for the TSP Board. This cost can seriously impact their budget.

So far all the board's discussion has focused on the I-fund. I do think that the FV problem with the I-fund needs to be fixed. I do not think that charging for trades is the answer. I know that I personally have lost way more to poor FV guesses than I ever will if I was charged $10 per trade.

Example: $300,000 * FV oops of 0.2% = $600.

52 trades (1 per week) * $10 =$520.

I have lost way more than 0.2% to poor FV guesses by Barclays.

Anyway, I think y'all are perpetuating a myth that the problem is frequent trading due to cost of trading. That is NOT the problem. The problem the board is facing ... which is very real ... is that they have had to cough up a bunch of money to cover I-fund FV's that were not correct. (POOR GUESSES)

This could be fixed by using overnight futures in a snap. Could also be fixed by moving the time that trades are executed from COB to noon.

Is this going over people's heads? Do I need to explain this in a little more detail?

I know Mike Causy doesn't understand. It has gone over his head.

 

[SkyPilot]

I am concerned that the policy makers and opinion shapers get it and don't lump the IFT concerns in with FV concerns.

 

[RGP22407]

FUNDSURFER:

I agree with you that this is the "real" problem, but there is no way they could explain it to the average TSP customer, so they are using something sort of "related" that is also an emotional issue that will get them what they want. Costs to change the system will probably be hidden in the new fees.

Ref ur statement "Could also be fixed by moving the time that trades are executed from COB to noon."

Wouldn't they have to move all transaction processing to noon in order to process the I fund transfers -- moving our cutoff in turn?

 

[SkyPilot]

Another way to compensate for the FV issue might be to establish a TSP buffer account and fund it out of their allowable operating percentage for a year or so.

TSP FV overages could be deposited and insure the negative FV guesses. Overtime the FV guesses reach equilibrium.

Just like most of us probably have a "float" amount in our checkbook, that keeps us from accidentally over-drafting.

Could also be called petty cash .

 

[Birchtree]

A 7 day round trip turnaround time would solve 95% of the fee problem. I bet they'll try the time constraint first before adding fees to the transactions.

 

[RGP22407]

Another way to compensate for the FV issue might be to establish a TSP buffer account and fund it out of their allowable operating percentage for a year or so.

TSP FV overages could be deposited and insure the negative FV guesses. Overtime the FV guesses reach equilibrium.

Just like most of us probably have a "float" amount in our checkbook, that keeps us from accidentally over-drafting.

Could also be called petty cash .

They are doing something to compensate now, but it is most likely re-allocating funds within their appropriation. I'm way out of date with Fed rules and regs, but I think they must comply with the Anti-Deficiency Act and not obligate money they don't have. It might be coming from the funds that pay the contractor (?). I'm not a lawyer nor have I seen their balance sheet.

I don't think logic or reason is going to be a major part of this decision on fees; they are after something to stabilize their operation without regard to the desires of their customers.

 

[12%ayear]

The bottom-line it is our money and TSP should step back.

 

[James48843]

http://washingtontimes.com/article/20070904/NATION06/109040043/1008 In March, roughly 35,000 TSP investors moved about $1.7 billion from the stock index funds — mostly the I Fund — into the Treasury securities or bond funds. TSP officials said they "discourage active trading" because the TSP is a long-term investment

I am going to say this ONE TIME. And I want EVERYBODY to understand what I am about to say- and think about it. Hard.

Here goes:

FACT #1:
In March, (*that's the entire 31 days of March) roughly 35,000 investors moved $1.7 billion dollars out of "I" fund.

Now- that's 35,000, out of 3,700,000 investors who are in the TSP.

LESS THAN 1% of INVESTORS. Do you understand that? Less than 1% of people moved $1.7 billion. OUT OF $229 BILLION. That's less than 1% of the investment funds, OVER A WHOLE MONTH. LESS THAN 1% of INVESTORS MOVED LESS THAN 1% OF THE MONEY. AND IT COST THE TSP BOARD, --AND YOUR FELLOW INVRESTORS-- ALMOST NOTHING TO DO THAT.


FACT#2:

EVERYONE- Understand that the TSP MADE 59 million dollars last year from Loan fees, and had a TOTAL expense of administration of around 73 million. So we are talking about it costing just 14 million dollars (above the Loan fees) to run the entire TSP system. That includes the costs to receive money, buy stocks, maintain accounts, run the call center, staff the DC office, handle distributions of funds, make loans, record court orders, Etc. Etc. Etc.

That is UNHEARD OF FOR LOW COSTS.


If the TSP Board wants to charge fees to move funds, it has NO RELATION TO THE COSTS. None. Nada.

It has EVERYTHING to do with people THINKING ON THEIR OWN--not following what the current head of the TSP board THINKS is the way people should handle their money.

He thinks they should only buy and hold. Period.

So if he wants to impose fees, THE ONLY REASON IS TO DISCOURAGE PEOPLE FROM HANDLING THEIR OWN MONEY.


Now- there. I've said it.

Think about that for a while.

You ought to be mad as heck at ANYONE who even MENTIONS that there should be fees for interfund transfers.

USE FACTS-

TELL PEOPLE .... Get your co-workers informed with FACTS.

NNNNNOOOO! TO USER FEES.

CALL YOUR CONGRESSMAN, GIVE HIM/HER the FACTS.

And say NO TO USER FEES.

 

[camper65]

Far from perfect
I would agree to requiring fees for ITFs only if TSP service be vastly improved!
While I see TPS as a good system for creating substantial retirement accounts, lets not forget it is far from perfect! I did some trading in the private sector, Ameritrade to be exact, and while I can tell you that it wasn’t the best of my endeavors, (I simply do not have the instincts required) it did enlighten me to the short comings of the TSP system.
With Ameritrade the transactions were instantaneous, to buy or sell stocks took only seconds. I fail to see why we are restricted to a system that requires hours to perform transactions while private industry can do it in seconds!
And what about our choices? I would not call five funds to pick from as having numerous choices! (Opps! Forget the L funds! I rather make my own mistakes!) There is a great deal of option available that we simply do not have.
What I would suggest is that two systems be developed, One sys. As we have it now, FEE FREE!!!!
The other modeled after private industry, with instant ITFs and more choices.
The system, as it stands now is free, and does not justify the imposition of FEES!!!
Allen:suspicious:

 

[Birchtree]

James is absolutely correct on this issue. It simply boils down to the Donkey concept of multiculturalism. Multiculturalism is really an updated version of radical egalitarianism which seeks to eliminate all standards and aspirations in order to reduce everyone and everything to the same level. From an ideological standpoint, multiculturalism is but a thinly veiled attack on the central principles and ideas of Western civilization. Why should those 35,000 individuals be allowed to be different and make their own decisions. These issues and principles have given us the greatest prosperity, the highest standard of living and, more important, the greatest individual freedom ever known to man. You are right to fear the Donkey my friends. Why won't the Donkey allow us the opportunity to manage 4% of our own social security - it's because we ain't smart or responsible enough. Just look at the subprime mess. I'll gladly pin the ice pick on the Donkey's tail.

 

[GuilRL]

Here's what I perceive to be the situation.

Outsiders with an interest for their own profit, or motivation for their own profit, are looking at the huge amounts in our TSP coffers and just can't wait to get their hands on our money. As a result, they are promoting lies of deception to instigate an issue which does not exist, to try to cajole the ignorant majority among us to agree to fee trades that should not be started. What is apparent is that those trying to question whether TSP trades should be fee'd or not are outsiders. I believe that these outsiders are delving in matters relating to defined benefits we as Federal Employees have, and if we let them have their way we will lose these benefits.

I think that Congress and we as benefactors of our well deserved and well earned defined benefits should give these outsiders what they deserve --- an emphatic NO! Further, we need to be mindful that thieves and profiteers are trying to instigate issues only because they will benefit from us, like leeches.

We need to make it clear to all outsiders that do not contribute to the TSP funds that they do not pay for what we pay to have our benefits continue, and that they should get out of our kitchen and stay out of matters they have not right to be in, or even a right to express an opinion on.