Improving the TSP [for current participants]

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
OutInThirteen
Posts: 381
Joined: Thu Mar 14, 2013 2:11 pm

Re: Improving the TSP [for current participants]

Post by OutInThirteen »

TimeRunner wrote:July 2015 FRTIB minutes have been published. Of most interest to me is Agenda Item #4:
"4. Withdrawal Options.
Mr. Long discussed the memo, "TSP Withdrawal Options" (attached), which recommends the Board's approval of additional flexibility to make partial withdrawals from TSP accounts, both in-service and post-separation. These recommendations address the challenge of a large percentage of recently separated participants taking full withdrawals as well as feedback from participants requesting greater flexibility. The proposed rules - specified on pages 4 and 5 of the memo - would allow for multiple partial in-service and post-separation withdrawals, where the current rules allow for only one. In response to a question from Board Member McCray, Mr. Long noted that participants currently have the ability to withdraw all of their money and take it elsewhere, so there is little downside to allowing them to withdraw part of their money more than once. He also stated that the purpose of the recommended rule changes is to improve outcomes for participants who are currently moving their money to plans with less advantageous designs because they are unable to make multiple withdrawals from their TSP accounts. · Mr. Long explained that these changes would require legislation followed by an Agency project, so this is not an immediate change. Board Members Jasien and McCray emphasized the importance of educating participants about the effect of withdrawals on their ability to accomplish retirement goals. Chairman Kennedy, Mr. Long, and Mr. Walther discussed the increased Agency workload that would result from these changes - especially given the interrelatedness between the withdrawal flexibility, mutual fund window, and investment advice - and steps the Agency will take to address this from both budget and project management perspectives.

Chairman Kennedy then entertained a motion regarding withdrawal options. The Board members made, seconded, and adopted the following motion by unanimous vote:
MOTION: That the Agency should proceed with a project to adopt the changes to the withdrawal rules proposed on pages 4 and 5 of the memo titled, "TSP Withdrawal Options," with the understanding that such changes are goals that will require legislation. "

Note that attachments listed at bottom of Agenda minutes PDF are actually links to the attachments and should open for viewing.
Meeting Minutes: http://www.frtib.gov/MeetingMinutes/2015/2015Jul.pdf
Agenda Item: http://www.frtib.gov/pdf/minutes/MM-2015Jul-Att7.pdf
This is certainly good news - thanks for posting! As I'm not quite 62 yet, I can wait a few years if necessary. The lack of withdrawal flexibiliity has been my biggest concern with the TSP.
User avatar
TimeRunner
Posts: 1939
Joined: Sat Dec 29, 2012 8:23 pm
Location: Beach-side, CA

Re: Improving the TSP [for current participants]

Post by TimeRunner »

August 2015 FRTIB Meeting Minutes have been published; no mention of any Withdrawal Options project or progress. http://www.frtib.gov/MeetingMinutes/2015/2015Aug.pdf
One cannot enlighten the unconscious. | "All I need are some tasty waves, a cool buzz, and I'm fine." -Jeff Spicoli
Topic Author
MichDad
Posts: 825
Joined: Sat Apr 20, 2013 3:50 pm

Re: Improving the TSP [for current participants]

Post by MichDad »

September 2015 FRTIB meeting minutes have been published. There's still no mention of any withdrawal options project or progress.

http://www.frtib.gov/MeetingMinutes/2015/2015Sept.pdf

MichDad
Topic Author
MichDad
Posts: 825
Joined: Sat Apr 20, 2013 3:50 pm

Re: Improving the TSP [for current participants]

Post by MichDad »

Nothing on these issues in the October 2015 FRTIB minutes.

https://www.frtib.gov/MeetingMinutes/2015/2015Oct.pdf

MichDad
mrc
Posts: 1908
Joined: Sun Jan 10, 2016 5:39 am

Re: Improving the TSP [for current participants]

Post by mrc »

MichDad,

Nothing on these issues in the November 2015 through February 2016 FRTIB minutes.

It would sure help us plan if we knew more flexible TSP withdrawal options were going to be available.
By the time you know enough to choose a good financial adviser, you don't need one. | bogleheads.org is my advisor: The ER is 0.0% and the advice always solid.
Topic Author
MichDad
Posts: 825
Joined: Sat Apr 20, 2013 3:50 pm

Re: Improving the TSP [for current participants]

Post by MichDad »

mrc wrote:MichDad,

Nothing on these issues in the November 2015 through February 2016 FRTIB minutes.

It would sure help us plan if we knew more flexible TSP withdrawal options were going to be available.
mrc,

I'm afraid the news is worse. In April, I corresponded with FRTIB staff about the Board's plan to add flexibility to TSP withdrawal options. Staff wrote back that these changes require congressional approval. I wrote back asking whether the FRTIB had asked Congress to enact a law to permit changes to the TSP's withdrawal options, and, if not, when it might do so? FRTIB staff wrote back as follows: "No the Federal Retirement Thrift Investment Board has not asked Congress to enact a law to permit changes to the TSP's withdrawal options at this time. We do not have a time line as to when we might do so."

I'm now resigned to the notion that when I retire from federal service, I'll withdraw all but a few hundred dollars (< $500) from my TSP account (currently > $1.4 million) and move it to Vanguard traditional and Roth IRAs. I'll probably make this TSP withdrawal in early 2018. I doubt the FRTIB will have acted before then.

Of all the retirement issues I face, this is the most frustrating.

MichDad
mrc
Posts: 1908
Joined: Sun Jan 10, 2016 5:39 am

Re: Improving the TSP [for current participants]

Post by mrc »

Thanks for the update MichDad! This is disturbing news, but not surprising. It's not a deal breaker for us -- we are still planning to stay in the wife's TSP, and hope that legislation will being moving through Congress again some day. On the other hand, we have access to Vanguard institutional class funds through our TIAA UMich accounts -- with ERs not much higher than the TSP. I will move my company 401k to TIAA/Vanguard funds when I leave my work. We just may move the TSP as well, to have everything under one roof and to maintain total flexibility for withdrawal options. I like the idea of leaving some in TSP though. We like that G fund for our fixed income.
By the time you know enough to choose a good financial adviser, you don't need one. | bogleheads.org is my advisor: The ER is 0.0% and the advice always solid.
User avatar
Info_Hound
Posts: 421
Joined: Wed Mar 23, 2011 9:47 am
Location: Threw a dart in a map and moved

Re: Improving the TSP [for current participants]

Post by Info_Hound »

MichDad wrote:
mrc wrote:MichDad,

Nothing on these issues in the November 2015 through February 2016 FRTIB minutes.

It would sure help us plan if we knew more flexible TSP withdrawal options were going to be available.
mrc,

I'm afraid the news is worse. In April, I corresponded with FRTIB staff about the Board's plan to add flexibility to TSP withdrawal options. Staff wrote back that these changes require congressional approval. I wrote back asking whether the FRTIB had asked Congress to enact a law to permit changes to the TSP's withdrawal options, and, if not, when it might do so? FRTIB staff wrote back as follows: "No the Federal Retirement Thrift Investment Board has not asked Congress to enact a law to permit changes to the TSP's withdrawal options at this time. We do not have a time line as to when we might do so."

I'm now resigned to the notion that when I retire from federal service, I'll withdraw all but a few hundred dollars (< $500) from my TSP account (currently > $1.4 million) and move it to Vanguard traditional and Roth IRAs. I'll probably make this TSP withdrawal in early 2018. I doubt the FRTIB will have acted before then.

Of all the retirement issues I face, this is the most frustrating.

MichDad
When it takes an act of Congress to allow individuals in the TSP to have the same flexibility for withdrawals of funds as is available elsewhere, I won't live long enough to see it happen. :shock: (I know, I've lived in the shadow of Congress and their silliness for most of my life)

I had concluded awhile back that taking a large chunk out of the TSP and moving it to my IRA was the only option available that allowed me to manage retirement fund withdrawals in a practical manner. I still have a chunk in the TSP specifically because of the G fund. I have been doing IRA -> ROTH conversions and will complete them with the money from the TSP before my IRA RMD kicks in. I can never move money into the TSP, only withdraw.

The only other advantage I gain from keeping anything in the TSP is the fact TSP RMDs will not kick in until I am 78 instead 70 as it does with my IRA. As a beneficiary survivor they have different rules for determing when RMDs are applicable. My TSP RMD age is 78. The down side of being an beneficiary survivor is when I pass my beneficiary will have to take a lump sum distribution or move it elsewhere as they will not be eliegible to continue the TSP account.
User avatar
TimeRunner
Posts: 1939
Joined: Sat Dec 29, 2012 8:23 pm
Location: Beach-side, CA

Re: Improving the TSP [for current participants]

Post by TimeRunner »

MichDad wrote:I'm now resigned to the notion that when I retire from federal service, I'll withdraw all but a few hundred dollars (< $500) from my TSP account (currently > $1.4 million) and move it to Vanguard traditional and Roth IRAs.... MichDad
My plan too, starting in early 2017. By leaving the account open, there's a future opportunity to move money back into TSP if they improve their withdrawal options. I don't want to leave the entire G "bond allocation" in the TSP (which would be mid six figures G fund) because frankly I don't trust the politicians to not mess with the G fund...as they've already made a few attempts to do that.
One cannot enlighten the unconscious. | "All I need are some tasty waves, a cool buzz, and I'm fine." -Jeff Spicoli
User avatar
TimeRunner
Posts: 1939
Joined: Sat Dec 29, 2012 8:23 pm
Location: Beach-side, CA

Re: Improving the TSP [for current participants]

Post by TimeRunner »

Saw this article today: TSP Board Still Seeking Lawmaker to Sponsor Its Proposal to Ease Withdrawals

Quote: "Despite receiving approval from the Senate-confirmed overseers last year, Thrift Savings Plan officials are still seeking a champion in Congress to sponsor legislation that would make it easier for former and current federal employees to access funds in their retirement savings accounts."

"The Federal Retirement Thrift Investment Board is looking for a lawmaker to “carry the banner” for a legislative package that would overhaul the withdrawal process for TSP participants, said Kim Weaver, the board’s director for external affairs, at a meeting on Monday. [Monday: 5/23/16] The five-member presidentially appointed panel gave the agency authority to pursue a legislative change in July 2015, but FRTIB has not found a member of Congress to introduce it." "

Tick-tock.... :annoyed
One cannot enlighten the unconscious. | "All I need are some tasty waves, a cool buzz, and I'm fine." -Jeff Spicoli
Topic Author
MichDad
Posts: 825
Joined: Sat Apr 20, 2013 3:50 pm

Re: Improving the TSP [for current participants]

Post by MichDad »

TimeRunner wrote:Saw this article today: TSP Board Still Seeking Lawmaker to Sponsor Its Proposal to Ease Withdrawals

Quote: "Despite receiving approval from the Senate-confirmed overseers last year, Thrift Savings Plan officials are still seeking a champion in Congress to sponsor legislation that would make it easier for former and current federal employees to access funds in their retirement savings accounts."

"The Federal Retirement Thrift Investment Board is looking for a lawmaker to “carry the banner” for a legislative package that would overhaul the withdrawal process for TSP participants, said Kim Weaver, the board’s director for external affairs, at a meeting on Monday. [Monday: 5/23/16] The five-member presidentially appointed panel gave the agency authority to pursue a legislative change in July 2015, but FRTIB has not found a member of Congress to introduce it." "

Tick-tock.... :annoyed
Thank you, TimeRunner.

While it's probably pure coincidence, I sent an email message to the five FRTIB members and to key FRTIB staff last week noting that their upcoming agenda (for yesterday's Board meeting) had an item about the status of current projects and asking them to obtain an update on the long-stalled proposal to expand TSP withdrawal options. Perhaps the FRTIB is taking this issue a bit more seriously?

I'm not impressed with the excuse that they're looking for a member of Congress to champion the required enabling legislation. I would think this would be non-controversial, non-partisan, and easy to accomplish. After all, members of Congress and their staffs will also benefit from these changes.

At least this is moving in the right direction -- even if only at a snail's pace.

MichDad
ABQ4804
Posts: 424
Joined: Sun Jul 24, 2011 4:08 pm

Re: Improving the TSP [for current participants]

Post by ABQ4804 »

Thanks for the updates, it certainly helps in making planning decisions for how to withdraw our TSP funds. Often when I close out of the TSP website, it invites me to take a brief survey. In the comment section, I always mention the need for more flexible withdrawal options. As someone mentioned, it shouldn't be hard to get Congressional members to support this, since it benefits them and their staff for their future TSP withdrawals. :moneybag
User avatar
Nestegg_User
Posts: 2112
Joined: Wed Aug 05, 2009 1:26 pm

Re: Improving the TSP [for current participants]

Post by Nestegg_User »

The only thing that mitigates my thought of moving my TSP balance is that my current retirement state does not fully tax TSP withdrawals but does IRA withdrawals.
My current thought is to move MOST of the TSP, so I can do Roth conversions between 62 and 70, while keeping some in the TSP where , if needed, I can get at it at a reduced state income tax level [ state income tax level was not the primary driver for where we retired]. The lack of ability to do annual Roth conversions within TSP would be nice even though there are RMD's; but the advantage of having a full Roth conversion outside for some more assets-- for greater tax efficiency and flexibility in withdrawals cannot be overlooked.

The loss of a few basis points is a cost of the greatly improved withdrawal options we will have ; especially the ability to annually vary withdrawal amounts to match needs and tax brackets (and use tax loss harvesting to further decrease state taxes).

Alas, as I just retired recently the clock has started.
User avatar
Info_Hound
Posts: 421
Joined: Wed Mar 23, 2011 9:47 am
Location: Threw a dart in a map and moved

Re: Improving the TSP [for current participants]

Post by Info_Hound »

TimeRunner wrote:Saw this article today: TSP Board Still Seeking Lawmaker to Sponsor Its Proposal to Ease Withdrawals

Quote: "Despite receiving approval from the Senate-confirmed overseers last year, Thrift Savings Plan officials are still seeking a champion in Congress to sponsor legislation that would make it easier for former and current federal employees to access funds in their retirement savings accounts."

"The Federal Retirement Thrift Investment Board is looking for a lawmaker to “carry the banner” for a legislative package that would overhaul the withdrawal process for TSP participants, said Kim Weaver, the board’s director for external affairs, at a meeting on Monday. [Monday: 5/23/16] The five-member presidentially appointed panel gave the agency authority to pursue a legislative change in July 2015, but FRTIB has not found a member of Congress to introduce it." "

Tick-tock.... :annoyed
Thank you for the update TimeRunner.

The statement of a lack of congressional champion is very odd. There are 100 Senators and 435 members of the House of Representatives. Not to be political, but that is a lot of people that could potentially sponsor this action. Maybe there has been a lack of urgency on the part of TSP to knock on their doors and get the ball rolling. The article also had this as well, time marches on:
FRTIB has pursued the change since a 2013 survey found one major reason employees moved their retirement savings into a privately run account was the difficulty they faced in accessing their money. Recent marketing efforts appealing to outgoing feds to keep their TSP accounts active after separating from federal service have resulted in similar feedback, board officials said Monday.
Topic Author
MichDad
Posts: 825
Joined: Sat Apr 20, 2013 3:50 pm

Re: Improving the TSP [for current participants]

Post by MichDad »

Here's a quote from the recently-published minutes from the Federal Retirement Thrift Investment Board's May 23, 2016 meeting:

"Mr. [James] Courtney [Director, FRTIB's Office of Communications and Education] also reported the results of a survey on the Stay microsite, which had over 130,000 views in the first four months and is the Agency's most viewed microslte ever. Many of the comments expressed appreciation for the information provided by the Stay campaign, but others criticized the Plan's withdrawal options and identified lack of withdrawal flexibility as the primary reason why they did or would not stay with TSP. Ms. [Kimberly A.] Weaver [Director, External Affairs] noted that the Agency has developed proposed legislation to change the withdrawal options and is seeking support in Congress, and Mr. [James] Sauber [National Association of Letter Carriers] indicated that ETAC [the Employee Thrift Advisory Council] may be able to assist with that effort."

Here's a link to the microsite at which TSP participants may relay their views about impediments to retaining their TSP accounts upon separation from government employment. In the comment box, I addressed the TSP's limited withdrawal options and the inability to make in-plan Roth conversions.

http://stay.questionpro.com/

MichDad
rgarling
Posts: 189
Joined: Wed Aug 29, 2007 11:24 am

Re: Improving the TSP [for current participants]

Post by rgarling »

Info_Hound wrote: ...

My TSP RMD age is 78.

...
I have never seen an RMD age other than 70.5 How did you get to 78?
Alan S.
Posts: 12669
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: Improving the TSP [for current participants]

Post by Alan S. »

rgarling wrote:
Info_Hound wrote: ...

My TSP RMD age is 78.

...
I have never seen an RMD age other than 70.5 How did you get to 78?
This would apply to a sole spousal beneficiary when such beneficiary is 8 years older than the participant, and the participant passed prior to their RBD. Same rule as for other qualified plans and for IRAs.

However, once those beneficiary RMDs begin, if the beneficiary were to pass, the successor beneficiaries will not get their own life expectancy stretch. To protect the successor beneficiaries at that time the spousal beneficiary needs to an IRA direct rollover.
Engineer250
Posts: 1082
Joined: Wed Jun 22, 2016 1:41 pm

Re: Improving the TSP [for current participants]

Post by Engineer250 »

MichDad wrote:Here's a quote from the recently-published minutes from the Federal Retirement Thrift Investment Board's May 23, 2016 meeting:

"Mr. [James] Courtney [Director, FRTIB's Office of Communications and Education] also reported the results of a survey on the Stay microsite, which had over 130,000 views in the first four months and is the Agency's most viewed microslte ever. Many of the comments expressed appreciation for the information provided by the Stay campaign, but others criticized the Plan's withdrawal options and identified lack of withdrawal flexibility as the primary reason why they did or would not stay with TSP. Ms. [Kimberly A.] Weaver [Director, External Affairs] noted that the Agency has developed proposed legislation to change the withdrawal options and is seeking support in Congress, and Mr. [James] Sauber [National Association of Letter Carriers] indicated that ETAC [the Employee Thrift Advisory Council] may be able to assist with that effort."

Here's a link to the microsite at which TSP participants may relay their views about impediments to retaining their TSP accounts upon separation from government employment. In the comment box, I addressed the TSP's limited withdrawal options and the inability to make in-plan Roth conversions.

http://stay.questionpro.com/

MichDad
Thanks for posting!

I agree with the above poster that says this should be a win-win for congress, benefits them directly. Surprised no congress members in the beltway area are sponsoring this given how many highly paid federal employees are there. Or how about getting employee unions on board as well?

I admit though if I wrote my congressman it would probably be about next year's proposed pay increase though rather than issues with the TSP.
Where the tides of fortune take us, no man can know.
Wayson
Posts: 80
Joined: Thu Jul 10, 2014 11:33 am

Re: Improving the TSP [for current participants]

Post by Wayson »

I still cannot fathom why the TSP has yet to modernize its withdrawal mechanism. I don't imagine that this is a highly controversial issue on the Hill, so I'm assuming that to date it's been more the reluctance of the TSP Board to do anything more than abstractly consider the notion of change. Good to see that they've finally started developing proposed legislation however.

As things stand right now, as someone who is interested in retiring earlier than age 59.5, I will be pulling out all equities from TSP and retaining an account solely for the G Fund. The rest will go into a Traditional IRA, where I have substantially greater flexibility in withdrawal frequency/amounts as well as the ability to implement a Roth conversion ladder. I've got some time before I'll need to access my TSP funds still, but I would like to see progress on this front beyond the glacial pace to date.
User avatar
TimeRunner
Posts: 1939
Joined: Sat Dec 29, 2012 8:23 pm
Location: Beach-side, CA

Re: Improving the TSP [for current participants]

Post by TimeRunner »

FRTIB's July 2016 minutes are published today at: https://www.frtib.gov/MeetingMinutes/2016/2016Jul.pdf

It doesn't appear that withdrawal options or flexibilities are anywhere on their project list. The big three overarching project groupings are: Near term cybersecurity/infrastructure fixes, building out the target architecture, and audit remediation, finishing 2018-2021 timeframe. I don't see anything relevant in the 'out years' beyond 2021, but it could be considered under "enhancing the participant experience' perhaps. The stats in Attachment 1 are interesting as always. As of June, 2016, there were 4.93 million TSP participants. DOD's input has FRTIB projecting about 263,000 new enrollees every year thru 2027 (slide 4, https://www.frtib.gov/pdf/minutes/MM-2016May-Att6.pdf ). A focus appears to be bulking up to handle the new volume, and not spend much time on withdrawal options. So it goes.
One cannot enlighten the unconscious. | "All I need are some tasty waves, a cool buzz, and I'm fine." -Jeff Spicoli
mrc
Posts: 1908
Joined: Sun Jan 10, 2016 5:39 am

Re: Improving the TSP [for current participants]

Post by mrc »

I suppose if 4 people come in for every retiree that withdrawals everything (or nearly everything), retention and bettering the withdrawal options won't make the top three on the to do list.
By the time you know enough to choose a good financial adviser, you don't need one. | bogleheads.org is my advisor: The ER is 0.0% and the advice always solid.
User avatar
TimeRunner
Posts: 1939
Joined: Sat Dec 29, 2012 8:23 pm
Location: Beach-side, CA

Re: Improving the TSP [for current participants]

Post by TimeRunner »

FRTIB 2017-2021 Strategic Plan has been released. The good news is that withdrawal improvements appear to be addressed on page 21, sections D2.1 and D2.2:
TSP 3D: Dialogue, Delivery, and Data
D1.1. Identify critical touch points in a participant’s life that represent opportunities for the participant
to make important TSP decisions
D1.2. Make the policy decision on offering "advice" to participants
D1.3. Begin collecting key participant demographic data, such as salary, deferral rate and gender
data, that will facilitate individualized communications
D1.4. Implement outbound and individualized communications based on life events
D2.1. Implement additional withdrawal options to accommodate post-retirement needs
D2.2. Implement capability to invest and withdraw Roth and traditional balances separately to
facilitate participant tax advantages
D2.3. Launch additional Lifecycle (L) Funds in five-year intervals, e.g., 2025, 2030, 2035, etc. to allow
participants to more closely align their L Fund investment decision with their future withdrawal plans
D2.4. Launch Mutual Fund Window to increase investment flexibility
D2.5. Implement the Zone of Confidence on participant annual statements to inform participants on
the expected sufficiency of their current and projected TSP savings

The bad news is that the transition to TSP 3D looks to be more towards the 2021 timeframe, with higher priority projects (e.g. Cybersecurity) addressed first...which makes sense, but hence this outcome. As I said upthread, the onboarding of 250K+ uniformed military members each year, and the accompanying servicing, training, and support is a bigger priority than accommodating post-retirement needs. See chart on page 22 for overall project priorities.
One cannot enlighten the unconscious. | "All I need are some tasty waves, a cool buzz, and I'm fine." -Jeff Spicoli
SurferLife
Posts: 704
Joined: Sun Jun 15, 2014 1:57 am

Re: Improving the TSP [for current participants]

Post by SurferLife »

I'm fast approaching a decision point on my TSP account and am patiently waiting for many of these changes (Traditional to Roth Conversions and more withdrawal options to mirror current 401k programs that better serve participants.) I do not want to leave the TSP, but staying in it is not an optimal choice for our financial planning unless many of these changes are implemented. Unfortunately, I do not see the board implementing any changes anytime soon since there is about to be a large increase in TSP participation with the new military retirement changes being implemented in 2018. They will need to prepare for that and I feel that anything done for retirees is secondary to current "active" participants. Though, maybe an influx of new blood into the TSP would motivate the board to update the TSP, bringing it current with what has become standard in the industry. Whoever commented on their glacial pace was spot-on. I do enjoy the simplicity of the fund choices though, and though an emerging market piece to the Intl fund would be nice, I see that as being quite a minor issue that would hardly effect many account balances.
trueblueky
Posts: 2365
Joined: Tue May 27, 2014 3:50 pm

Re: Improving the TSP [for current participants]

Post by trueblueky »

SurferLife wrote:I'm fast approaching a decision point on my TSP account and am patiently waiting for many of these changes (Traditional to Roth Conversions and more withdrawal options to mirror current 401k programs that better serve participants.) I do not want to leave the TSP, but staying in it is not an optimal choice for our financial planning unless many of these changes are implemented. Unfortunately, I do not see the board implementing any changes anytime soon since there is about to be a large increase in TSP participation with the new military retirement changes being implemented in 2018. They will need to prepare for that and I feel that anything done for retirees is secondary to current "active" participants. Though, maybe an influx of new blood into the TSP would motivate the board to update the TSP, bringing it current with what has become standard in the industry. Whoever commented on their glacial pace was spot-on. I do enjoy the simplicity of the fund choices though, and though an emerging market piece to the Intl fund would be nice, I see that as being quite a minor issue that would hardly effect many account balances.
I couldn't wait. I pulled part of my TSP in order to do Roth conversions. If the proposed changes are made, I'd be happy to move the Roth back into TSP.
Engineer250
Posts: 1082
Joined: Wed Jun 22, 2016 1:41 pm

Re: Improving the TSP [for current participants]

Post by Engineer250 »

SurferLife wrote:I'm fast approaching a decision point on my TSP account and am patiently waiting for many of these changes (Traditional to Roth Conversions and more withdrawal options to mirror current 401k programs that better serve participants.) I do not want to leave the TSP, but staying in it is not an optimal choice for our financial planning unless many of these changes are implemented. Unfortunately, I do not see the board implementing any changes anytime soon since there is about to be a large increase in TSP participation with the new military retirement changes being implemented in 2018. They will need to prepare for that and I feel that anything done for retirees is secondary to current "active" participants. Though, maybe an influx of new blood into the TSP would motivate the board to update the TSP, bringing it current with what has become standard in the industry. Whoever commented on their glacial pace was spot-on. I do enjoy the simplicity of the fund choices though, and though an emerging market piece to the Intl fund would be nice, I see that as being quite a minor issue that would hardly effect many account balances.
Agree with you 100%. I am really happy with the fund choices, and don't think they should be a priority until withdrawal is sorted out.

Would like to see more withdrawal options, and never even thought about (but agree it would be great) ability to Roth convert.

If nothing changes, my tentative plan is to roll everything out (except $1 or whatever) whenever I need to start drawing on the money as my first partial withdrawal, and then roll back in to just pre-tax with maybe just what I want in the G Fund. Hopefully they'll have it figured out in 20-30 years, but my experience with gov't so far says not to hold my breath :P
Where the tides of fortune take us, no man can know.
User avatar
Earl Lemongrab
Posts: 7270
Joined: Tue Jun 10, 2014 1:14 am

Re: Improving the TSP [for current participants]

Post by Earl Lemongrab »

trueblueky wrote:If the proposed changes are made, I'd be happy to move the Roth back into TSP.
You can't roll Roth IRAs into the TSP or similar plans like 401(k)s. That's a legal restriction, not administrative.

Earl
nova1968
Posts: 227
Joined: Wed May 18, 2016 12:00 pm

Re: Improving the TSP [for current participants]

Post by nova1968 »

If you have over a million in your TSP your doing real well, only 3300 of 5,000,000 Govt Employees or retirees have that much

http://federalnewsradio.com/federal-rep ... aire-club/
trueblueky
Posts: 2365
Joined: Tue May 27, 2014 3:50 pm

Re: Improving the TSP [for current participants]

Post by trueblueky »

Earl Lemongrab wrote:
trueblueky wrote:If the proposed changes are made, I'd be happy to move the Roth back into TSP.
You can't roll Roth IRAs into the TSP or similar plans like 401(k)s. That's a legal restriction, not administrative.

Earl
Agree that some of the changes needed in TSP are based on law. Another is that withdrawals are proportionately from taxable and Roth portions of TSP.

NARFE is working toward the needed changes.
mrc
Posts: 1908
Joined: Sun Jan 10, 2016 5:39 am

Re: Improving the TSP [for current participants]

Post by mrc »

Earlier in the 2017-2021 plan doc, in the 2012-2017 summary they said:
We also surveyed participants to learn more about their preferences and withdrawal behaviors and hired professionals who greatly strengthen our ability to draw information from data by analyzing, testing, and projecting.
So, that wouldn't include anyone that pulled out and left? :?

I get onboarding all these new participants is important, but without more flexible withdrawal options, we'll have to pull out soon.
By the time you know enough to choose a good financial adviser, you don't need one. | bogleheads.org is my advisor: The ER is 0.0% and the advice always solid.
Engineer250
Posts: 1082
Joined: Wed Jun 22, 2016 1:41 pm

Re: Improving the TSP [for current participants]

Post by Engineer250 »

trueblueky wrote:
Earl Lemongrab wrote:
trueblueky wrote:If the proposed changes are made, I'd be happy to move the Roth back into TSP.
You can't roll Roth IRAs into the TSP or similar plans like 401(k)s. That's a legal restriction, not administrative.

Earl
Agree that some of the changes needed in TSP are based on law. Another is that withdrawals are proportionately from taxable and Roth portions of TSP.
Right, but the law part is not unique. Fidelity/Vanguard/Schwab won't let you roll in a Roth IRA into a Roth 401k. I agree with the second part, not being able to choose separate investments (say I want only G Fund in pre-tax, not in my Roth TSP) and the issues with proportional withdrawals are frustrating. Other 401ks let you do this.
nova1968 wrote:If you have over a million in your TSP your doing real well, only 3300 of 5,000,000 Govt Employees or retirees have that much

http://federalnewsradio.com/federal-rep ... aire-club/
I have heard that stat before, but it still blows my mind. However, I do not have over $1mil in my TSP either :D
Where the tides of fortune take us, no man can know.
Topic Author
MichDad
Posts: 825
Joined: Sat Apr 20, 2013 3:50 pm

Re: Improving the TSP [for current participants]

Post by MichDad »

Engineer250 wrote: If nothing changes, my tentative plan is to roll everything out (except $1 or whatever) whenever I need to start drawing on the money as my first partial withdrawal, and then roll back in to just pre-tax with maybe just what I want in the G Fund. Hopefully they'll have it figured out in 20-30 years, but my experience with gov't so far says not to hold my breath :P
Engineer250,

Take a look at this post:

viewtopic.php?f=10&t=140180&start=50#p2609340

MichDad
Engineer250
Posts: 1082
Joined: Wed Jun 22, 2016 1:41 pm

Re: Improving the TSP [for current participants]

Post by Engineer250 »

MichDad wrote:
Engineer250 wrote: If nothing changes, my tentative plan is to roll everything out (except $1 or whatever) whenever I need to start drawing on the money as my first partial withdrawal, and then roll back in to just pre-tax with maybe just what I want in the G Fund. Hopefully they'll have it figured out in 20-30 years, but my experience with gov't so far says not to hold my breath :P
Engineer250,

Take a look at this post:

viewtopic.php?f=10&t=140180&start=50#p2609340

MichDad
Excellent post. And for the record I stole my "plan" for someone who posted on here (might have been you, but not from 2013 as I wasn't reading here back then).

I can personally deal just fine with the lack of traditional to Roth transfers (I'm not honestly sure if my former 401k allowed anything like that). Just wish the system allowed: a) Different allocations for your Roth vs your Traditional [so I can hold G Fund in traditional but not Roth] and b) More than the two withdrawals (basically) that you can do now.

If I could have separate investments between the two, and was allowed to make say 1 partial withdrawal a year after I separate, that would be enough I'd probably leave everything in it. As is, I'll probably be doing something similar to your plan. At least I have a lot longer to wait for improvements, and a lot longer to put money into Roth TSP.
Where the tides of fortune take us, no man can know.
User avatar
TimeRunner
Posts: 1939
Joined: Sat Dec 29, 2012 8:23 pm
Location: Beach-side, CA

Re: Improving the TSP [for current participants]

Post by TimeRunner »

I retired Dec 2016 and have started the process this week to withdraw all but a placeholder in the TSP so that I have the option of returning if/when TSP improves withdrawal options, allows different holdings for Roth and TIRA, etc.

For partial withdrawals, TSP Form-77 asks the total withdrawal amount on page 1. There is no option to withdraw ALL BUT $xxx amount. This would not be a big deal if the TSP processed withdrawal requests quickly, because you could put everything in the G fund (which I did recently) and know that it would never go DOWN below the amount of total withdrawal you specified, and it would only be a bit more within the few days it took between form submittal and withdrawal processing.

I'm using Fidelity for TIRA and Roth, and they have a central back office that signs form sections 10 and 12 (TIRA and Roth account verification) and then immediately sends the form to the TSP. (I assumed that a branch office could sign off but that is not the case.) Fido advises that they have processed "many TSP withdrawals" and have seen the TSP take up to SIX WEEKS to process a withdrawal, which involves issuing and sending physical checks to your brokerage for TIRA and Roth accounts.

The impact of this, besides being in that inbetween state for up to six weeks, is that you can't specify how much money to leave behind in the TSP. It could be a couple hundred dollars but could also be a few thousand depending on when they process the withdrawal. Just another reason working with the TSP is more difficult than it should be.
One cannot enlighten the unconscious. | "All I need are some tasty waves, a cool buzz, and I'm fine." -Jeff Spicoli
User avatar
Info_Hound
Posts: 421
Joined: Wed Mar 23, 2011 9:47 am
Location: Threw a dart in a map and moved

Re: Improving the TSP [for current participants]

Post by Info_Hound »

TimeRunner

Use the TSP-90 form if you are a Beneficiary Participant Account. In Section II line 10 you can specify a $ amount versus a %.

From what I have gleamed from the traditional account info (vs. BPA account) you can request a % of the total as a partial withdrawal. Calculate what % of your current total you want to leave in the TSP and enter the remaining percentage as your partial withdrawal amount on the form.

That is the kicker, the TSP form must be filled out exactly as stated, no stray marks, no info outside of their little boxes. They will reject your form if stray marks make their optical scanner declare the form as 'unreadable' even though a human can easily read it.

The TSP required my form be notarized but that wasn't a problem since the Fidelity person I dealt with at their brick and mortar office was also a notary. Fidelity sent my TSP form to a Fidelity office in Ohio where the person who is authorized to sign for Fidelity worked. The TSP required that I submit the form (this may not be the case for non-BPA accounts) vs. Fidelity, so I had the TSP form returned to me by Fidelity once their folks had completed their portion of the form.

As to the actual transfer of funds, yes you will get a check sent to you by the TSP with both your name and Fidelity shown as the payees from the TSP. Yes, the check will take about a month to arrive once the TSP accepts your paperwork.

I received an email notice from the TSP just yesterday that informed me:

G Fund and the debt limit
As of today, March 16, 2017, the U.S. Treasury was unable to fully invest the Government Securities Investment (G) Fund due to the statutory ceiling on the federal debt. However, G Fund investors remain fully protected and G Fund earnings are fully guaranteed by the federal government. This statutory guarantee has effectively protected G Fund investors many times over the past 25 years. G Fund account balances will continue to accrue earnings and will be updated each business day, and loans and withdrawals will be unaffected.

I do not know how or if this will affect your partial withdrawal plans.

My only regret was not taking more out than I did. However, to be fair, I can not put money into the TSP because BPAs are restricted from being able to do so.
kathyauburn
Posts: 192
Joined: Thu May 07, 2015 12:25 pm

Re: Improving the TSP [for current participants]

Post by kathyauburn »

MichDad wrote:I've been investing into the TSP since 1987 and my account balance far exceeds $1 million. While I continue to believe that the TSP is a wonderful investment vehicle, I think it can be improved significantly in several respects. I've been considering this and have come up with five things the Federal Retirement Thrift Investment Board could do to improve the TSP. It is my hope that others can contribute to this list by adding items or by critiquing my suggestions. Once I have a vetted list, I plan on writing to the FRTIB requesting that they consider my suggestions. I thank you in advance for considering my suggestions. Here they are:

1. Allow in-plan conversions from the regular TSP to the Roth TSP.
2. Allow TSP account holders to invest their regular TSP contributions in different funds and in different percentages/amounts than in their Roth TSP.
3. Allow TSP account holders to withdraw their regular TSP and Roth TSP funds in different percentages/amounts. For example, if an account holder wants to keep his or her Roth TSP monies in the TSP longer than his or her regular TSP funds, this should be permitted. [I know that under current law, this suggestion cannot be applied to withdrawals resulting from Required Minimum Distributions.]
4. Allow TSP account holders to change their withdrawal options at least annually. For example, we should be permitted to take out different lump sum amounts anytime.
5. Modify the I fund so it will include Canadian equities and equities from emerging markets. If emerging market equities are not included in the I fund, there should be a new fund created (an E fund?) to encompass this sector.

MichDad
I like the TSP just the way it is.
kathyauburn
Posts: 192
Joined: Thu May 07, 2015 12:25 pm

Re: Improving the TSP [for current participants]

Post by kathyauburn »

texasdiver wrote:I'm frankly glad they didn't "improve" it by doing all the things my cohort of younger workers wanted to see happen back in the late 90s during the tech bubble when we Federal workers were chafing at seeing our funds locked into the boring TSP when friends in the private sector were investing their 401(k) funds in high flying tech funds from places like Janus.....Yikes!

The older I get and the more I learn the happier I am with the TSP. It's like how your parents are idiots when you are 16 and somehow manage to get a whole lot smarter by the time you hit 30.

As for improvements to the current program? I wouldn't mind seeing the I fund expanded to include developing markets along the lines of the Vanguard Total International Stock fund. But I suspect the long term difference of such a change would be pretty negligible.
agree
kathyauburn
Posts: 192
Joined: Thu May 07, 2015 12:25 pm

Re: Improving the TSP [for current participants]

Post by kathyauburn »

gkaplan wrote:I still plan on keeping my TSP. I like having the G Fund option. Since I already am retired from federal service, over seventy, drawing Social Security, and in the twenty-five percent marginal tax bracket, I probably would chose not to convert my traditional TSP to a Roth TSP anyway, although it would be nice to have that option.
I think the G fund is the single greatest thing in the world of investing. I doubt I will ever leave the tsp.
User avatar
TimeRunner
Posts: 1939
Joined: Sat Dec 29, 2012 8:23 pm
Location: Beach-side, CA

Re: Improving the TSP [for current participants]

Post by TimeRunner »

Info_Hound wrote:TimeRunner

Use the TSP-90 form if you are a Beneficiary Participant Account. In Section II line 10 you can specify a $ amount versus a %.
I'm not so I need to use TSP-77 for this partial withdrawal. The $ amount is the amount of withdrawal. As I said, there's no way to specify "withdraw ALL BUT $xxx" amount.
From what I have gleamed from the traditional account info (vs. BPA account) you can request a % of the total as a partial withdrawal. Calculate what % of your current total you want to leave in the TSP and enter the remaining percentage as your partial withdrawal amount on the form.
The % withdrawal option(s) don't refer to the OVERALL withdrawal, but the % of TIRA withdrawal to go into Roth or taxable, etc. Section 2 of Form-77 only asks how much $ you want to withdraw.
That is the kicker, the TSP form must be filled out exactly as stated, no stray marks, no info outside of their little boxes. They will reject your form if stray marks make their optical scanner declare the form as 'unreadable' even though a human can easily read it.

The TSP required my form be notarized but that wasn't a problem since the Fidelity person I dealt with at their brick and mortar office was also a notary. Fidelity sent my TSP form to a Fidelity office in Ohio where the person who is authorized to sign for Fidelity worked. The TSP required that I submit the form (this may not be the case for non-BPA accounts) vs. Fidelity, so I had the TSP form returned to me by Fidelity once their folks had completed their portion of the form.
That may also be the case here. I was told they send it, but that could be incorrect.
As to the actual transfer of funds, yes you will get a check sent to you by the TSP with both your name and Fidelity shown as the payees from the TSP. Yes, the check will take about a month to arrive once the TSP accepts your paperwork.
Which is weird because they ask on TSP-77 for the full name and address of Fidelity. This may be different than Beneficiary withdrawal.
I received an email notice from the TSP just yesterday that informed me:

G Fund and the debt limit
As of today, March 16, 2017, the U.S. Treasury was unable to fully invest the Government Securities Investment (G) Fund due to the statutory ceiling on the federal debt. However, G Fund investors remain fully protected and G Fund earnings are fully guaranteed by the federal government. This statutory guarantee has effectively protected G Fund investors many times over the past 25 years. G Fund account balances will continue to accrue earnings and will be updated each business day, and loans and withdrawals will be unaffected.

I do not know how or if this will affect your partial withdrawal plans.
Supposedly it doesn't.
My only regret was not taking more out than I did. However, to be fair, I can not put money into the TSP because BPAs are restricted from being able to do so.Thank you for sharing your experience.
One cannot enlighten the unconscious. | "All I need are some tasty waves, a cool buzz, and I'm fine." -Jeff Spicoli
Topic Author
MichDad
Posts: 825
Joined: Sat Apr 20, 2013 3:50 pm

Re: Improving the TSP [for current participants]

Post by MichDad »

kathyauburn wrote: I like the TSP just the way it is.
Kathy,

Unlike most 401(k) plans, the TSP does not permit participants to convert any regular TSP assets to Roth TSP assets. Similarly the TSP does not permit participants to hold their regular TSP assets in different funds and in different proportions than their Roth TSP assets. These limitations create problems for those participants who hold (or want to hold) both types of assets. They are but two examples of TSP restrictions that hurt TSP participants.

MichDad
User avatar
VictoriaF
Posts: 20122
Joined: Tue Feb 27, 2007 6:27 am
Location: Black Swan Lake

Re: Improving the TSP [for current participants]

Post by VictoriaF »

MichDad wrote:
kathyauburn wrote: I like the TSP just the way it is.
Kathy,

Unlike most 401(k) plans, the TSP does not permit participants to convert any regular TSP assets to Roth TSP assets. Similarly the TSP does not permit participants to hold their regular TSP assets in different funds and in different proportions than their Roth TSP assets. These limitations create problems for those participants who hold (or want to hold) both types of assets. They are but two examples of TSP restrictions that hurt TSP participants.

MichDad
Kathy,

I concur with MichDad's statement. I like the TSP just the way it is with respect to its choice of funds, fund expenses, and constraints on frequent trading. But as an early retiree, I am forced to transfer my TSP funds to Vanguard, because I can't do in-plan Roth conversions.

Victoria
Inventor of the Bogleheads Secret Handshake | Winner of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
bayview
Posts: 2332
Joined: Thu Aug 02, 2012 7:05 pm
Location: WNC

Re: Improving the TSP [for current participants]

Post by bayview »

I would like to keep my TSP at around 25/75 (the 75 in G) to keep a bit of growth going once I start RMDs.

TSP's insistence on withdrawing proportionately among all funds means that I would be forced to sell C and S at a loss when stocks are down, just to do an RMD. This confounds all rules of common-sense investing, where you either pull from what has done well, leaving the others to recover, or pull from all funds in such a way that you rebalance to your target AA.

I appreciate that TSP doesn't offer a lot of complexity among its funds (although I don't invest in the I fund because of its limited version of international), but the restrictions on withdrawals doesn't protect less sophisticated investors. It just forces everyone into dumb withdrawals. I suppose I'll reduce my AA to 90/10 or so to minimize the forced sale of depressed stock shares, meaning that it will run out faster. They're not doing investors any favors.
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri
User avatar
TimeRunner
Posts: 1939
Joined: Sat Dec 29, 2012 8:23 pm
Location: Beach-side, CA

Re: Improving the TSP [for current participants]

Post by TimeRunner »

Gave Fido my TSP-77 form today in person. 100% in G fund as of last Friday, which is skewing my overall asset allocation for the next few weeks (up to six? urgh) it will take to move the TIRA and Roth from TSP to Fido. In the meantime, each day it's in the G fund adds $100-something to my overall TSP balance, so I may be leaving a couple thousand $ in the TSP by the time the transfer is executed. "First World problem." 8-)

Looking forward to TIRA->Roth conversion in last quarter of this year.
Last edited by TimeRunner on Wed Mar 22, 2017 3:28 pm, edited 1 time in total.
One cannot enlighten the unconscious. | "All I need are some tasty waves, a cool buzz, and I'm fine." -Jeff Spicoli
MnD
Posts: 5195
Joined: Mon Jan 14, 2008 11:41 am

Re: Improving the TSP [for current participants]

Post by MnD »

I've been reading this very instructive thread for years and still can't come up with a reason for us to do or want to do Roth conversions now or later.
As a 2-income couple since 1985 all our retirement savings was/is done in tax-sheltered accounts. Looking at old tax tables virtually every dollar saved us either 28%, 31% or the worse than 28% or 31% marginal rate of the AMT rate on every dollar contributed. We avoided AMT several years by maxing out the my traditional TSP and her traditional 401-K.

For funds coming out, my taxable pension, taxable FERS supplement and what we will withdraw from tax-sheltered accounts will fill up the 0 bracket, the 15% bracket and part of the 25% bracket. If you count pension and FERS supplement as the dollars filling up the 0% and part of the 15% bracket, the tax-sheltered withdrawals still have a favorable average tax rate blend of 15% and 25%, not even remotely close to the tax-sheltered advantage going in as 28%, 31% or higher. If market returns are so amazing in the years ahead that our portfolio swells to the point that RMD's push some portion of our TSP and IRA withdrawals into the 28% bracket, that just puts some the dollars coming out to the lowest rate they saved us going in and with a portfolio much larger than expected.

Until recently the conventional wisdom here was that tax rates were of course going much higher so pay the Roth conversion costs for "future" insurance. Now it seems that might have been a bad bet for those that did so. If anyone sees something I'm missing here on my lack of interest in Roth options I'm all ears.

As for the inflexibility in withdrawal amounts, it seems that you pull out about any amount of withdrawals if you have the time and liquidity to do so over 12 monthly payments or less since there is a very low lower limit and an upper limit of the account balance on the monthly draw. We have her 401-K, tIRA, my inherited tIRA, our bank and a taxable account emergency funds. Seems unlikely we will get painted in a corner over TSP withdrawal inflexibility. Rolling TSP into a tIRA for a mid-50's retiree might create more inflexibility in terms of having to set up a 5-year 72(t) distribution plan from the tIRA.

I do wish the I fund was total International and that children could rollover a spousal beneficiary TSP account into their inherited stretch-out IRA. The latter issue may be why we eventually leave the TSP, but who knows. Stretch-out IRA's have been a target for elimination in the recent past and may be so again.
70/30 AA for life, Global market cap equity. Rebalance if fixed income <25% or >35%. Weighted ER< .10%. 5% of annual portfolio balance SWR, Proportional (to AA) withdrawals.
Topic Author
MichDad
Posts: 825
Joined: Sat Apr 20, 2013 3:50 pm

Re: Improving the TSP [for current participants]

Post by MichDad »

MnD,

Here's how I've been thinking about my TSP account and Required Minimum Distributions. I've got about $1.5 million in the regular TSP. That represents about 25 years of lowering my taxable income as I made those investments. I've been investing into the Roth TSP since that option was first made available in 2012. The Roth TSP portion of my TSP account is now approaching $150,000 -- that's on top of the $1.5 million in my regular TSP account. My government match continues to go into the regular (non-Roth) portion of my TSP account.

In addition, my wife has a nice chunk of money in her regular 401(k) and, like me, has been loading up her Roth 401(k) accounts for years. Together, we now have well over $800,000 in Roth assets (Roth TSP, Roth 401(k)s, and Roth IRAs).

I remain concerned that our RMDs at and after age 70.5 will be substantial. I'd prefer to make Roth conversions from when I retire at age 62 until I begin to collect Social Security benefits at age 70. Unlike most 401(k) plans, the TSP does not allow its participants to make Roth conversions. Also during that 7 to 8 year period between retirement and receipt of Social Security benefits, we'll probably concentrate our spending first from my FERS pension and then from my regular TSP and from my wife's regular 401(k) to reduce those balances. As you know, Roth IRA accounts are not subject to RMDs. My wife and I will be able to spend from our Roth IRA accounts as needed/desired and not according to any mandated schedule.

If things go well, we could have $2 million+ in Roth assets by the time my wife and I are both subject to RMDs.

MichDad
rkhusky
Posts: 17766
Joined: Thu Aug 18, 2011 8:09 pm

Re: Improving the TSP [for current participants]

Post by rkhusky »

MichDad wrote: As you know, Roth IRA accounts are not subject to RMDs.
Not currently subject to RMD's. Would be good to have a plan thought out in case Congress removes that some day.
User avatar
TimeRunner
Posts: 1939
Joined: Sat Dec 29, 2012 8:23 pm
Location: Beach-side, CA

Re: Improving the TSP [for current participants]

Post by TimeRunner »

Perhaps our letters and comments have had some effect. Check this fresh news: https://www.fedsmith.com/2017/04/06/leg ... l-options/

See also Senator Rob Portman's press release: https://www.portman.senate.gov/public/i ... 27797BD72D

Happy I left money behind to keep my TSP account open after moving two commas out of TSP yesterday.
One cannot enlighten the unconscious. | "All I need are some tasty waves, a cool buzz, and I'm fine." -Jeff Spicoli
User avatar
LadyGeek
Site Admin
Posts: 95696
Joined: Sat Dec 20, 2008 4:34 pm
Location: Philadelphia
Contact:

Re: Improving the TSP [for current participants]

Post by LadyGeek »

As a reminder, political comments (proposed legislation) are off-topic. For the purposes of this thread: Subject: Improving the TSP [for current participants]
Alex Frakt wrote:After Advisory Board review, we are unlocking this thread. This discussion is on topic as long as it is restricted to the parts of TSP which are under the control of the Federal Retirement Thrift Investment Board. As one of the Advisory Board members put it:
Some changes would require an act of Congress, and those should be off-topic. But others, such as in-plan conversions (which I believe are already under discussion), or allowing regular and Roth accounts to be kept separate for withdrawal purposes (which is presumably an accounting change, not a legal change), are the responsibility of the Federal Retirement Thrift Advisory Board. Proposals by current participants for writing a letter to that board are personally actionable.
So let's keep it to the OP's original question. Posts on legislative changes such as extension of the TSP to the general public are off topic.
Bear in mind that proposed legislation can change many times before it becomes law (if...).
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
Seqfish
Posts: 8
Joined: Tue Sep 20, 2016 11:42 am
Location: Atlanta, GA

More TSP flexibility?

Post by Seqfish »

Sounds useful... but still only a proposal.

http://wapo.st/2o24QOY?tid=ss_mail
User avatar
LadyGeek
Site Admin
Posts: 95696
Joined: Sat Dec 20, 2008 4:34 pm
Location: Philadelphia
Contact:

Re: Improving the TSP [for current participants]

Post by LadyGeek »

Seqfish, Welcome! I moved your post into the on-going discussion.

FYI - Seqfish's link in human readable format: New withdrawal options for TSP investors proposed, from the Washington Post.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
Engineer250
Posts: 1082
Joined: Wed Jun 22, 2016 1:41 pm

Re: Improving the TSP [for current participants]

Post by Engineer250 »

I was heartened to see the recent article. It also said something about more investment choices rolling around by 2020, so I'm hoping that means the options for more withdrawal might happen sooner. That said, I have a long way to go, but will probably leave federal service long before I hit any milestone in years, so I'd like the option to make changes sooner rather than later. I'd like to leave as much pre-tax money in the TSP as I can, and ideally that would include through retirement. But if withdrawal options don't change I'll do my 1st one time withdrawal right after I retire that will undoubtedly be the majority of the balance, and get to the rest when I get to it.
MnD wrote: Until recently the conventional wisdom here was that tax rates were of course going much higher so pay the Roth conversion costs for "future" insurance. Now it seems that might have been a bad bet for those that did so. If anyone sees something I'm missing here on my lack of interest in Roth options I'm all ears.
I'm surprised that's the perception you have. I may not have been following these boards as long, but I feel like I've gotten the opposite perception. Or an assumption that if my current tax rate is 25% or higher than my taxes in retirement will definitely be lower (which is an assumption that future tax rates will either stay the same or be lower, in addition that my retirement income will stay the same or be lower). My personal plan is to try to get my pre-tax and Roth balances to be about the same. This is the same reason I diversify in all my portfolios. I consider this tax diversification. I didn't have access to a Roth 401k until a few years ago though, and unfortunately this last year for tax reasons I had to put a majority into pre-tax so I'm at 75% pre tax / 25% Roth of all my retirement accounts. But like I said, I'm hoping to get that to 50/50 eventually.
Where the tides of fortune take us, no man can know.
Post Reply