Roll SGENX to Thrift Savings

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HeartinAK
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Roll SGENX to Thrift Savings

Post by HeartinAK » Sat Jan 13, 2018 12:49 pm

Good morning. Is there any benefit to rolling my First Eagle SGENX traditional IRA over to my TSP? I do not have much in either place and only $11,000 in the SGENX. The fee seems quite low to me to keep it there, $15 a year. I don't think it is really diversification if they are both IRA type accounts?
Thanks in advance for any help. I truly appreciate these boards and have read so much. Really working hard to pay off debt thanks to the helpful tips here.
Jules

PFInterest
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Re: Roll SGENX to Thrift Savings

Post by PFInterest » Sat Jan 13, 2018 3:06 pm

the TSP is not an IRA.
would rec stop contributing/get out of SGENX.
are you paying the load as well?

daveydoo
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Re: Roll SGENX to Thrift Savings

Post by daveydoo » Sat Jan 13, 2018 3:37 pm

HeartinAK wrote:
Sat Jan 13, 2018 12:49 pm
Is there any benefit to rolling my First Eagle SGENX traditional IRA over to my TSP?
This question has many parts. We can't really speak to the "benefit" part without knowing your goals, demographics, financial situation, etc.

I believe that one can roll a traditional IRA into one's TSP account:

https://www.tsp.gov/PlanParticipation/E ... thods.html (methods for moving your money into TSP)

I assume that you have access to TSP through your employer. TSP is great with amazingly low fees; however, the investment menu is limited. As index-type funds, there is nothing cheaper. TSP has some funny rules in the event of your death -- make sure you and/or your spouse are familiar with those if this account will hold a sizable share of your assets.

SGENX is a bit of an odd duck and there is nothing in TSP that would "match." It's a "world" fund but the top holdings are US. It has done well, largely (to my eye) by avoiding the biggest dip in 2008 and 2009. Since then, it looks like it has underperformed its peers a bit. It is expensive at 1.2% ER.

Timing-wise, I'd be a little scared to swap it into the TSP C-Fund (or a C- and I-Fund combination) right this minute since your present holding may weather a short-term correction better. Eventually, the corrosive effect of the 1.2% ER will make SGENX a laggard no matter what.

Good luck!
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Duckie
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Re: Roll SGENX to Thrift Savings

Post by Duckie » Sat Jan 13, 2018 8:35 pm

HeartinAK wrote:Is there any benefit to rolling my First Eagle SGENX traditional IRA over to my TSP?
The TSP is not an IRA but you are allowed to roll TIRA cash assets over to a Thrift Savings Plan. You are also allowed to roll TIRA assets from one custodian to another. You could sell SGENX at your current custodian and move the money to a TIRA at a low-cost custodian like Vanguard or Fidelity.

One benefit of rolling the TIRA assets to your TSP would be if you wanted to use the Backdoor Roth IRA method and needed to "hide" the TIRA because of the pro-rata rule.

What custodian currently holds SGENX?

Are you planning to contribute to a TIRA in the future?

HeartinAK
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Re: Roll SGENX to Thrift Savings

Post by HeartinAK » Sun Jan 14, 2018 11:11 am

Thank you for your replies and clarifying for me that the TSP is not an IRA. I have gotten into this so late in life but am trying to learn and play catch up.
I have the SGENX fund through First Eagle. Would that be the custodian?
I am not yet maxing out my TSP so any additional contributions I can make in the future I think would be to increase my TSP. Still paying off debt and have a way to go with that.
My TSP is all C,S, and L2040. I have about 12 years until I retire so still trying to be aggressive. If keeping the SGENX won't hurt me then maybe my best option is just to leave it.
I am not sure what the "load" is? From my statements, I only pay the $15 a year as a fee. If there are other fees I must not know how to identify them.
I really do appreciate all of the replies. I am sorry I can't be more knowledgeable and offer better responses.

Jules

delamer
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Re: Roll SGENX to Thrift Savings

Post by delamer » Sun Jan 14, 2018 11:23 am

Deleted (incorrect)
Last edited by delamer on Sun Jan 14, 2018 5:09 pm, edited 1 time in total.

pkcrafter
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Re: Roll SGENX to Thrift Savings

Post by pkcrafter » Sun Jan 14, 2018 12:04 pm

HeartinAK wrote:
Sun Jan 14, 2018 11:11 am
Thank you for your replies and clarifying for me that the TSP is not an IRA. I have gotten into this so late in life but am trying to learn and play catch up.
I have the SGENX fund through First Eagle. Would that be the custodian?
I am not yet maxing out my TSP so any additional contributions I can make in the future I think would be to increase my TSP. Still paying off debt and have a way to go with that.
My TSP is all C,S, and L2040. I have about 12 years until I retire so still trying to be aggressive. If keeping the SGENX won't hurt me then maybe my best option is just to leave it.
I am not sure what the "load" is? From my statements, I only pay the $15 a year as a fee. If there are other fees I must not know how to identify them.
I really do appreciate all of the replies. I am sorry I can't be more knowledgeable and offer better responses.

Jules
The custodian is investment company where you hold this fund. Where is that?

Do you know your overall asset allocation (percentage in each holding). Just looking at the C,S, and L2020 means you have more than 72% in equity because that's the amount of equity in L2020. Being aggressive has it's place, but as you get closer to retirement, you may need to cut back on the risk.

The load is the 5% commission you paid to buy SGENX. The $15 isn't the only fee you pay. The expense ratio is 1.11%, and that's taken out on a regular basis. The returns are show after the expense ratio is taken out.


Paul
Last edited by pkcrafter on Sun Jan 14, 2018 1:57 pm, edited 1 time in total.
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

HeartinAK
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Re: Roll SGENX to Thrift Savings

Post by HeartinAK » Sun Jan 14, 2018 1:48 pm

Thanks again for the replies. I am very quickly learning that I have no idea what a lot of these terms mean. I am going to start with the resources of this board and learn the beginning investment terms. Thanks for opening my eyes to this.

I am also going to call First Eagle and talk to someone about the load and expense ratio so I can better understand the total costs of this fund. I haven't contributed to this for about 20 years.

My TSP is 70% C, 15% S, 15% L2040.

Jules

pkcrafter
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Re: Roll SGENX to Thrift Savings

Post by pkcrafter » Sun Jan 14, 2018 1:59 pm

If you are actually holding the fund at First Eagle, then you are probably paying a management fee also.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

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grabiner
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Re: Roll SGENX to Thrift Savings

Post by grabiner » Sun Jan 14, 2018 2:51 pm

HeartinAK wrote:
Sun Jan 14, 2018 1:48 pm
My TSP is 70% C, 15% S, 15% L2040.
It doesn't make sense to use this type of allocation. The L funds are designed to manage your whole portfolio by themselves, so they are appropriate if you don't want to manage the portfolio. If you are going to retire in or about 2040, then it's fine to put your whole portfolio in L2040; this will get more conservative as retirement approaches, which is what you want. If you do this, you might as well either roll your IRA into the TSP, or roll it to another low-cost IRA provider such as Vanguard and use Vanguard's similar Target Retirement 2040 fund.

In contrast, if you have most of your money in stock funds, then you will have to move from stock to bonds as you get closer to retirement, and you don't gain any simplicity from the L2040. If you are going to do this, then it makes more sense to hold designated percentages in the individual investments, including the G fund to get your desired risk reduction.

Either way, the reason to get money out of First Eagle is that you are losing 1.2% per year to expenses, versus 0.03% in the TSP. That compounds every year; in 20 years, your investment return would underperform the return of the actual stocks in the fund by more than 20%.
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Earl Lemongrab
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Re: Roll SGENX to Thrift Savings

Post by Earl Lemongrab » Sun Jan 14, 2018 2:54 pm

delamer wrote:
Sun Jan 14, 2018 11:23 am
The load is the Expense Ratio (ER). In the fund documents, it will be expressed as a percentage such as 1.0%.
No, a load is a fee to buy or sell (depends on the fund) that serves in part as a commission to the account manager.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

WillRetire
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Re: Roll SGENX to Thrift Savings

Post by WillRetire » Sun Jan 14, 2018 4:03 pm

HeartinAK wrote:
Sat Jan 13, 2018 12:49 pm
Good morning. Is there any benefit to rolling my First Eagle SGENX traditional IRA over to my TSP? I do not have much in either place and only $11,000 in the SGENX. The fee seems quite low to me to keep it there, $15 a year. I don't think it is really diversification if they are both IRA type accounts?
Thanks in advance for any help. I truly appreciate these boards and have read so much. Really working hard to pay off debt thanks to the helpful tips here.
Jules
To answer your original question, the BENEFIT of rolling your SGENX IRA into TSP is consolidation. Also, it adds to your TSP balance so that you have more money with which to purchase an annuity from TSP when you retire. Last I looked, TSP had very good annuity choices. TSP funds have ultra low expenses.

The DISADVANTAGES to rolling out of SGENX into TSP are: Limited fund choices in TSP, and leaving SGENX...
SGENX is an excellent balanced fund with excellent management. It is relatively stable during crashes. It has a small exposure to gold. It is relatively conservative. Annualized returns are quite good, even considering the expenses. Very likely, you have already paid the sales load up front when you purchased the fund.

You might call First Eagle Funds, if that is where you have your SGENX account, and ask them how to avoid the $15 / year fee. Your IRA statement should tell you who the custodian is & where your shares are held.

delamer
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Re: Roll SGENX to Thrift Savings

Post by delamer » Sun Jan 14, 2018 5:08 pm

Earl Lemongrab wrote:
Sun Jan 14, 2018 2:54 pm
delamer wrote:
Sun Jan 14, 2018 11:23 am
The load is the Expense Ratio (ER). In the fund documents, it will be expressed as a percentage such as 1.0%.
No, a load is a fee to buy or sell (depends on the fund) that serves in part as a commission to the account manager.
You are correct. I will delete my original response.

ICMoney
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Re: Roll SGENX to Thrift Savings

Post by ICMoney » Sun Jan 14, 2018 5:31 pm

daveydoo wrote:
Sat Jan 13, 2018 3:37 pm
HeartinAK wrote:
Sat Jan 13, 2018 12:49 pm
Is there any benefit to rolling my First Eagle SGENX traditional IRA over to my TSP?
This question has many parts. We can't really speak to the "benefit" part without knowing your goals, demographics, financial situation, etc.

I believe that one can roll a traditional IRA into one's TSP account:

https://www.tsp.gov/PlanParticipation/E ... thods.html (methods for moving your money into TSP)

I assume that you have access to TSP through your employer. TSP is great with amazingly low fees; however, the investment menu is limited. As index-type funds, there is nothing cheaper. TSP has some funny rules in the event of your death -- make sure you and/or your spouse are familiar with those if this account will hold a sizable share of your assets.

SGENX is a bit of an odd duck and there is nothing in TSP that would "match." It's a "world" fund but the top holdings are US. It has done well, largely (to my eye) by avoiding the biggest dip in 2008 and 2009. Since then, it looks like it has underperformed its peers a bit. It is expensive at 1.2% ER.

Timing-wise, I'd be a little scared to swap it into the TSP C-Fund (or a C- and I-Fund combination) right this minute since your present holding may weather a short-term correction better. Eventually, the corrosive effect of the 1.2% ER will make SGENX a laggard no matter what.

Good luck!
We've done direct rollovers from traditional IRAs to the TSP. You will need to fill out Part I of this form (https://www.tsp.gov/PDF/formspubs/tsp-60.pdf) and mail it to First Eagle so that they can fill it out and mail a check for your entire account to the TSP. Also include a "letter of instruction: for First Eagle telling them what you want them to do (i.e. "Please fill out Part II of Form TSP-60, and send this form with a rollover check for my entire traditional IRA to the TSP"). First Eagle will likely also have a form you need to fill out to document the rollover (ideally include this filled out form in the same envelope as the TSP-60). The rollover will take a few weeks to hit your TSP account.

Of course, as others have mentioned, it could make sense to just have this IRA rolled over to a lower cost custodian, but the TSP is a great option as well (either choice would result in lower expense ratios than leaving it where it is).

Best,
ICM

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grabiner
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Re: Roll SGENX to Thrift Savings

Post by grabiner » Sun Jan 14, 2018 6:57 pm

daveydoo wrote:
Sat Jan 13, 2018 3:37 pm
Timing-wise, I'd be a little scared to swap it into the TSP C-Fund (or a C- and I-Fund combination) right this minute since your present holding may weather a short-term correction better. Eventually, the corrosive effect of the 1.2% ER will make SGENX a laggard no matter what.
To deal with the risk issue, you could swap the fund for a combination of the C/I funds and the G fund. Morningstar says that the fund has a beta of about .6 to the MSCI All Country World Index; that is, when the index gains or loses 10% in a short time, the fund will gain or lose 6%. If you swap for 30% C, 30% I, and 40% G, you'll get about the same protection if the market falls, with much lower expenses.

However, you shouldn't look at one fund in isolation. Your portfolio as a whole should be consistent with your risk tolerance. If you want a portfolio which has 80% stock (common for a young investor), then 20% of your total portfolio should be in bonds. It doesn't matter that you have single funds which are 100% stock, or even funds that are 100% risky stock (such as the TSP S fund), since the effect on your finances is determined only by what happens to your whole portfolio.
Wiki David Grabiner

HeartinAK
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Re: Roll SGENX to Thrift Savings

Post by HeartinAK » Mon Jan 15, 2018 12:05 pm

Thank you all so much for providing your insights and resources on how to complete the transfer.

Overall, it seems like the costs of leaving it where it is may outweigh the benefit. I also had not given any thought to having it calculated into any annuity I might have in the future if I roll it into the TSP.

I will also need to evaluate my fund choices in the TSP. My risk tolerance would usually not be very good but I only have 12 years to make any gains that I can so that will need to factor into my decisions. I will investigate more about the L funds and how those work.

Thank you again for all of the replies and help!

Jules

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