Improving the TSP [for current participants]

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Helo80
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Re: TSP vs Fidelity Zeroes

Post by Helo80 » Sun Aug 05, 2018 1:48 pm

motorcyclesarecool wrote:
Sun Aug 05, 2018 10:24 am
I have zero reason to remain with the TSP after separation from service.
....

As a TSP account holder, what is the best way for me to advocate more cost cuts to the Federal Retirement Thrift Investment Board?


Access to the G-Fund is enough of a reason to remain at TSP. The ERs of TSP are already absurdly low. For $330 for every million invested at TSP, I doubt that is going to make or break your retirement. Yeah, if you're spending $5 to $10 grand (or more) in fees for your index funds every year, IMHO, you have much bigger problems to worry about at that point as obviously you're in the $10+ million range with Vanguard, Fidelity, Schwab or TSP. I think the largest TSP account on the books is somewhere in the high $4 million to low $5 million range and likely had one (or several) rollovers from private sector work experience.

It is not often I'm envious of BHs 401k's when they reach out here for 401k advice. The TSP fund, despite the few choices, is genuinely one of the better products our government has created.

Helo80
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Re: TSP vs Fidelity Zeroes

Post by Helo80 » Sun Aug 05, 2018 1:54 pm

motorcyclesarecool wrote:
Sun Aug 05, 2018 10:24 am
I imagine they also hope to upsell their customers later on.

Oh yes. I have some monies in the Fidelity TSM index fund and noticed they slashed the fees to 1.5 bp. I can live with that, and I have zero interest in moving to this loss leader until a few years are under the belt of the fund and people on this website and professionals peer review it.

Odds are, Fidelity is not pulling a switcharoo on us, but I'm not going to fret over bps.

motorcyclesarecool
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Re: TSP vs Fidelity Zeroes

Post by motorcyclesarecool » Sun Aug 05, 2018 2:06 pm

I’m pretty sure it’s not a loss leader for Fidelity; they are being more aggressive with securities lending, which FRTIB could do easily.

I was able to get into the zeros on day zero. I’ve rolled all available funds in both our Fido Roth IRAs to the zeros as of Close of Business Friday, in accordance with our AA. This involved selling Premium Class shares and BlackRock commission-free ETFs. My Vanguard Roth IRA is going to sit tight for now.

I used to contribute to a deductible IRA at Vanguard every year and promptly roll it to the TSP for the lower costs and to keep the deck clear for Backdoor Roth. Now I’m thinking I’ll open a Traditional IRA with Fido, invest in Zero funds, and only roll to the TSP if I find myself in a position to Backdoor Roth once more. TSP would lose out on Assets Under Management.
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

MnD
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Re: TSP vs Fidelity Zeroes

Post by MnD » Sun Aug 05, 2018 3:15 pm

Fidelity nor anyone else offers a G fund.
IRA's have less protection from creditors depending on the state versus TSP.
Rebalancing between the G fund and other TSP funds is easier than rebalancing between G fund and various Fidelity IRA funds.
Fidelity international 0% doesn't have small caps whereas TSP I fund will beginning in 2019.
You can withdraw from TSP right away when retiring age 55-59. With an IRA you have to set up an SEPP or meet other restrictive exceptions to avoid an early withdrawal penalty prior to age 59.5.

WanderingDoc
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Re: TSP vs Fidelity Zeroes

Post by WanderingDoc » Sun Aug 05, 2018 4:37 pm

MnD wrote:
Sun Aug 05, 2018 3:15 pm
Fidelity nor anyone else offers a G fund.
IRA's have less protection from creditors depending on the state versus TSP.
Rebalancing between the G fund and other TSP funds is easier than rebalancing between G fund and various Fidelity IRA funds.
Fidelity international 0% doesn't have small caps whereas TSP I fund will beginning in 2019.
You can withdraw from TSP right away when retiring age 55-59. With an IRA you have to set up an SEPP or meet other restrictive exceptions to avoid an early withdrawal penalty prior to age 59.5.
Do those small caps in TSP intl include China/Vietnam etc.? I want to be invested in those countries.
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.

MnD
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Re: TSP vs Fidelity Zeroes

Post by MnD » Sun Aug 05, 2018 4:55 pm

WanderingDoc wrote:
Sun Aug 05, 2018 4:37 pm
MnD wrote:
Sun Aug 05, 2018 3:15 pm
Fidelity nor anyone else offers a G fund.
IRA's have less protection from creditors depending on the state versus TSP.
Rebalancing between the G fund and other TSP funds is easier than rebalancing between G fund and various Fidelity IRA funds.
Fidelity international 0% doesn't have small caps whereas TSP I fund will beginning in 2019.
You can withdraw from TSP right away when retiring age 55-59. With an IRA you have to set up an SEPP or meet other restrictive exceptions to avoid an early withdrawal penalty prior to age 59.5.
Do those small caps in TSP intl include China/Vietnam etc.? I want to be invested in those countries.
When the transition is complete to the MSCI ACWI ex USA Investable Market Index yes those countries will be included in the TSP I fund.

https://www.fedsmith.com/2017/11/30/i-f ... posed-tsp/
The MSCI ACWI ex USA Investable Market Index (IMI) captures large, mid and small cap representation across 22 of 23 Developed Markets (DM) countries (excluding the United States) and 24 Emerging Markets (EM) countries. With 6,149 constituents, the index covers approximately 99% of the global equity opportunity set outside the US.

WanderingDoc
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Re: TSP vs Fidelity Zeroes

Post by WanderingDoc » Sun Aug 05, 2018 6:52 pm

MnD wrote:
Sun Aug 05, 2018 4:55 pm
WanderingDoc wrote:
Sun Aug 05, 2018 4:37 pm
MnD wrote:
Sun Aug 05, 2018 3:15 pm
Fidelity nor anyone else offers a G fund.
IRA's have less protection from creditors depending on the state versus TSP.
Rebalancing between the G fund and other TSP funds is easier than rebalancing between G fund and various Fidelity IRA funds.
Fidelity international 0% doesn't have small caps whereas TSP I fund will beginning in 2019.
You can withdraw from TSP right away when retiring age 55-59. With an IRA you have to set up an SEPP or meet other restrictive exceptions to avoid an early withdrawal penalty prior to age 59.5.
Do those small caps in TSP intl include China/Vietnam etc.? I want to be invested in those countries.
When the transition is complete to the MSCI ACWI ex USA Investable Market Index yes those countries will be included in the TSP I fund.

https://www.fedsmith.com/2017/11/30/i-f ... posed-tsp/
The MSCI ACWI ex USA Investable Market Index (IMI) captures large, mid and small cap representation across 22 of 23 Developed Markets (DM) countries (excluding the United States) and 24 Emerging Markets (EM) countries. With 6,149 constituents, the index covers approximately 99% of the global equity opportunity set outside the US.
Awesome. Thanks!
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.

PFInterest
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Re: TSP vs Fidelity Zeroes

Post by PFInterest » Mon Aug 06, 2018 7:09 am

motorcyclesarecool wrote:
Sun Aug 05, 2018 2:06 pm
I’m pretty sure it’s not a loss leader for Fidelity; they are being more aggressive with securities lending, which FRTIB could do easily.

I was able to get into the zeros on day zero. I’ve rolled all available funds in both our Fido Roth IRAs to the zeros as of Close of Business Friday, in accordance with our AA. This involved selling Premium Class shares and BlackRock commission-free ETFs. My Vanguard Roth IRA is going to sit tight for now.

I used to contribute to a deductible IRA at Vanguard every year and promptly roll it to the TSP for the lower costs and to keep the deck clear for Backdoor Roth. Now I’m thinking I’ll open a Traditional IRA with Fido, invest in Zero funds, and only roll to the TSP if I find myself in a position to Backdoor Roth once more. TSP would lose out on Assets Under Management.
how do you propose that selling something for zero is not a loss leader? do you buy hot dogs from costco?

do you understand that its 80% of an index?

wait what are you doing? by contributing to a tIRA, and not converting it, theres nothing to keep the deck clear of since you cant do a backdoor rIRA (you already used up your 5.5K contribution allowance).
im not sure you have a grasp on the backdoor rIRA.

motorcyclesarecool
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Re: TSP vs Fidelity Zeroes

Post by motorcyclesarecool » Mon Aug 06, 2018 9:25 am

PFInterest wrote:
Mon Aug 06, 2018 7:09 am
motorcyclesarecool wrote:
Sun Aug 05, 2018 2:06 pm
I’m pretty sure it’s not a loss leader for Fidelity; they are being more aggressive with securities lending, which FRTIB could do easily.

I was able to get into the zeros on day zero. I’ve rolled all available funds in both our Fido Roth IRAs to the zeros as of Close of Business Friday, in accordance with our AA. This involved selling Premium Class shares and BlackRock commission-free ETFs. My Vanguard Roth IRA is going to sit tight for now.

I used to contribute to a deductible IRA at Vanguard every year and promptly roll it to the TSP for the lower costs and to keep the deck clear for Backdoor Roth. Now I’m thinking I’ll open a Traditional IRA with Fido, invest in Zero funds, and only roll to the TSP if I find myself in a position to Backdoor Roth once more. TSP would lose out on Assets Under Management.
how do you propose that selling something for zero is not a loss leader? do you buy hot dogs from costco?

do you understand that its 80% of an index?

wait what are you doing? by contributing to a tIRA, and not converting it, theres nothing to keep the deck clear of since you cant do a backdoor rIRA (you already used up your 5.5K contribution allowance).
im not sure you have a grasp on the backdoor rIRA.
Aggressive securities lending is how they make their money on the Zeroes. It’s no more a loss leader than no-load mutual funds were when they were first introduced. They make money the same way any bank does, by having your assets under their management, and making loans based on them.

My contention is that FRTIB could make back their costs through securities lending, the same way as Fido does in the Zeroes.

Have you seen the scatter plots for VTI versus VOO? FZROX should fall between the two. I’m just fine with 80% of an index if it’s free.

I don’t do backdoor Roth every year. I only do it in windfall years. In non-windfall years I’ll max out my Traditional contributions to deduct them. Typically, in non-windfall years, I’ve rolled my deductible TIRA to the TSP so that in windfall years, I’ll be able to backdoor Roth without worrying about the pro-rata rule. With ERs going down in the free market and ERs going up within the TSP, I’m no longer incentivized to roll my deductible IRA money in until a windfall takes place. Therefore, in a few short years, TSP will be missing out on tens of thousands of dollars of AUM. Multiply that out by some fraction of active Feds, and you get quite a number they’re missing out on.

When I retire, unless something changes, I’ll be taking a significant fraction of my TSP balance with me (except whatever G-Fund allocation I desire) and putting it into cheaper vehicles. Multiply that out by a substantial fraction of retiree Feds, and FRTIB might be looking at a death spiral if they can’t contain the expenses.
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

trueblueky
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Re: TSP vs Fidelity Zeroes

Post by trueblueky » Mon Aug 06, 2018 12:29 pm

motorcyclesarecool wrote:
Mon Aug 06, 2018 9:25 am
PFInterest wrote:
Mon Aug 06, 2018 7:09 am
motorcyclesarecool wrote:
Sun Aug 05, 2018 2:06 pm
I’m pretty sure it’s not a loss leader for Fidelity; they are being more aggressive with securities lending, which FRTIB could do easily.

I was able to get into the zeros on day zero. I’ve rolled all available funds in both our Fido Roth IRAs to the zeros as of Close of Business Friday, in accordance with our AA. This involved selling Premium Class shares and BlackRock commission-free ETFs. My Vanguard Roth IRA is going to sit tight for now.

I used to contribute to a deductible IRA at Vanguard every year and promptly roll it to the TSP for the lower costs and to keep the deck clear for Backdoor Roth. Now I’m thinking I’ll open a Traditional IRA with Fido, invest in Zero funds, and only roll to the TSP if I find myself in a position to Backdoor Roth once more. TSP would lose out on Assets Under Management.
how do you propose that selling something for zero is not a loss leader? do you buy hot dogs from costco?

do you understand that its 80% of an index?

wait what are you doing? by contributing to a tIRA, and not converting it, theres nothing to keep the deck clear of since you cant do a backdoor rIRA (you already used up your 5.5K contribution allowance).
im not sure you have a grasp on the backdoor rIRA.
Aggressive securities lending is how they make their money on the Zeroes. It’s no more a loss leader than no-load mutual funds were when they were first introduced. They make money the same way any bank does, by having your assets under their management, and making loans based on them.

My contention is that FRTIB could make back their costs through securities lending, the same way as Fido does in the Zeroes.

Have you seen the scatter plots for VTI versus VOO? FZROX should fall between the two. I’m just fine with 80% of an index if it’s free.

I don’t do backdoor Roth every year. I only do it in windfall years. In non-windfall years I’ll max out my Traditional contributions to deduct them. Typically, in non-windfall years, I’ve rolled my deductible TIRA to the TSP so that in windfall years, I’ll be able to backdoor Roth without worrying about the pro-rata rule. With ERs going down in the free market and ERs going up within the TSP, I’m no longer incentivized to roll my deductible IRA money in until a windfall takes place. Therefore, in a few short years, TSP will be missing out on tens of thousands of dollars of AUM. Multiply that out by some fraction of active Feds, and you get quite a number they’re missing out on.

When I retire, unless something changes, I’ll be taking a significant fraction of my TSP balance with me (except whatever G-Fund allocation I desire) and putting it into cheaper vehicles. Multiply that out by a substantial fraction of retiree Feds, and FRTIB might be looking at a death spiral if they can’t contain the expenses.
Re: death spiral

They just added a million military members.

jsprag
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Re: TSP vs Fidelity Zeroes

Post by jsprag » Mon Aug 06, 2018 3:15 pm

motorcyclesarecool wrote:
Mon Aug 06, 2018 9:25 am
Multiply that out by a substantial fraction of retiree Feds, and FRTIB might be looking at a death spiral if they can’t contain the expenses.
I have serious doubts.

First, there's plenty of high-cost funds that have survived in an age of abundant low cost options. WFILX is surviving with AUM of $1.6B despite having an ER of 0.45%. Vanguard VFINX has been undercutting it by 0.31% or so for years without killing it off. I doubt the attraction of going from ER=0.033% in the TSP to ER=0 at Fidelity will motivate enough departures to cause a "death spiral".

Second, if Fidelity can make this work at scale then they would be able to outbid any other competitors for the contract to manage the TSP (at least the International fund). They wouldn't kill the TSP, they'd be the catalyst that could make it grow even faster.

motorcyclesarecool
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Re: TSP vs Fidelity Zeroes

Post by motorcyclesarecool » Mon Aug 06, 2018 9:42 pm

jsprag wrote:
Mon Aug 06, 2018 3:15 pm
....they'd be the catalyst that could make it grow even faster.
I certainly hope so. The federal government isn’t exactly known for common-sense bidding processes or standards. I’d like to figure out how best to keep their eye on the expense ball.
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

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Re: Improving the TSP [for current participants]

Post by LadyGeek » Mon Aug 06, 2018 10:07 pm

I merged motorcyclesarecool's thread into the on-going discussion. The combined thread is now in the Personal Finance (Not Investing) forum (retirement plan).

Note this is a "no politics" forum. Opinions of the political process are off-topic. See: Politics and Religion

That being said, the US government runs the TSP. Factual comments related to the Federal Retirement Thrift Investment Board are permitted.
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.

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MichDad
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Re: Improving the TSP [for current participants]

Post by MichDad » Fri Jan 04, 2019 4:14 pm

The FRTIB's November minutes have been posted online. The status of the project to expand TSP withdrawal options was discussed. Here's a link to the Board's minutes. You can read about the withdrawal options project on pages 4-5:

https://www.frtib.gov/MeetingMinutes/2018/2018Nov.pdf

Attached to the minutes was a FRTIB staff PowerPoint providing a summary of the project. For me, the most interesting slide was on Page 8. According to that timeline, the FRTIB's regulations will be published for public comment on June 21st -- mark your calendars. Assuming no delays, the expanded withdrawal options are scheduled to take effect on September 15, 2019. If that deadline is missed, the statutory deadline for implementing the changes is November 17, 2019. Here's a link to the FRTIB staff PowerPoint presentation:

https://www.frtib.gov/pdf/minutes/MM-2018Nov-Att6.pdf

MichDad

carol-brennan
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Re: Improving the TSP [for current participants]

Post by carol-brennan » Fri Jan 04, 2019 4:24 pm

MichDad wrote:
Fri May 30, 2014 12:14 pm
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 it just the way it is.

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hoppy08520
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Re: Improving the TSP [for current participants]

Post by hoppy08520 » Fri Jan 04, 2019 9:31 pm

carol-brennan wrote:
Fri Jan 04, 2019 4:24 pm
MichDad wrote:
Fri May 30, 2014 12:14 pm
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 it just the way it is.
Well, good for you. What a constructive comment to a poster who has invested a lot of time and effort to improve the TSP. Glad it works for you. A lot of the rest of us would appreciate these extra options.

ABQ4804
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Re: Improving the TSP [for current participants]

Post by ABQ4804 » Fri Jan 04, 2019 9:46 pm

MichDad, thanks for posting the meeting notes here; I wouldn’t hunt them down on my own. One item of interest to me is on page 4 where it says there will no longer be a deadline for full withdrawal/withdrawal plan at age 70.5. This reads as good news to me; hopefully it means we can start our RMDs from our choice of IRAs, more flexibility for us!

02nz
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Re: TSP vs Fidelity Zeroes

Post by 02nz » Fri Jan 04, 2019 10:02 pm

motorcyclesarecool wrote:
Mon Aug 06, 2018 9:25 am
When I retire, unless something changes, I’ll be taking a significant fraction of my TSP balance with me (except whatever G-Fund allocation I desire) and putting it into cheaper vehicles. Multiply that out by a substantial fraction of retiree Feds, and FRTIB might be looking at a death spiral if they can’t contain the expenses.
No offense but I think you (and I!) will be in our death spirals well before TSP, which is an extremely well-managed and cost-effective plan. Zero ER is a gimmick, and FRTIB doesn't do gimmicks.

trueblueky
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Re: Improving the TSP [for current participants]

Post by trueblueky » Fri Jan 04, 2019 10:38 pm

ABQ4804 wrote:
Fri Jan 04, 2019 9:46 pm
MichDad, thanks for posting the meeting notes here; I wouldn’t hunt them down on my own. One item of interest to me is on page 4 where it says there will no longer be a deadline for full withdrawal/withdrawal plan at age 70.5. This reads as good news to me; hopefully it means we can start our RMDs from our choice of IRAs, more flexibility for us!
Under current law, IRA distributions are figured separately from TSP, 401k.

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TimeRunner
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Re: Improving the TSP [for current participants]

Post by TimeRunner » Fri Jan 04, 2019 11:54 pm

It will be interesting to see how changes monthly distributions are actually implemented . The notes mention a new TSP-95 form. Hopefully it can be on-line and e-signature rather than mail-in wet signature. And, for those who are married, hopefully it wouldn't require spousal signature and notary. I am concerned it may end up that way, which would be cumbersome and not really address the issue.

I'm glad the TSP withdrawal options as currently implemented work for some folks (see an upthread post dated today), but many participants leave the TSP soon after retirement because withdrawal options are so inflexible and cumbersome.
One cannot enlighten the unconscious.

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MichDad
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Re: Improving the TSP [for current participants]

Post by MichDad » Sat Jan 05, 2019 12:46 am

TimeRunner wrote:
Fri Jan 04, 2019 11:54 pm
It will be interesting to see how changes monthly distributions are actually implemented . The notes mention a new TSP-95 form. Hopefully it can be on-line and e-signature rather than mail-in wet signature. And, for those who are married, hopefully it wouldn't require spousal signature and notary. I am concerned it may end up that way, which would be cumbersome and not really address the issue.
TimeRunner,

We'll have to read the proposed rules carefully when they're published in the Federal Register and be sure to file public comments on them. At a minimum, I plan on urging the FRTIB to allow participants to make Roth conversions within their TSP accounts and to hold their regular TSP assets in different funds and/or different proportions than their Roth TSP assets. As for the latter point, most people will want to hold their Roth assets longer than their regular TSP assets, so they may want to focus Roth assets more towards the C, I, and S Funds.

MichDad

motorcyclesarecool
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Re: TSP vs Fidelity Zeroes

Post by motorcyclesarecool » Sat Jan 05, 2019 7:11 am

02nz wrote:
Fri Jan 04, 2019 10:02 pm
motorcyclesarecool wrote:
Mon Aug 06, 2018 9:25 am
When I retire, unless something changes, I’ll be taking a significant fraction of my TSP balance with me (except whatever G-Fund allocation I desire) and putting it into cheaper vehicles. Multiply that out by a substantial fraction of retiree Feds, and FRTIB might be looking at a death spiral if they can’t contain the expenses.
No offense but I think you (and I!) will be in our death spirals well before TSP, which is an extremely well-managed and cost-effective plan. Zero ER is a gimmick, and FRTIB doesn't do gimmicks.
My main point is that costs are going down in the private sector (Fidelity had just done so when I posted but Vanguard has followed suit) but going up in the TSP. That doesn’t seem to be deserving of the modifier “extremely” beside the phrase “well managed and cost-effective”.
Understand that choosing an HDHP is very much a "red pill" approach. Most would rather pay higher premiums for a $20 copay per visit. They will think you weird for choosing an HSA.

Fishing50
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Re: Improving the TSP [for current participants]

Post by Fishing50 » Sat Jan 05, 2019 7:23 am

MichDad wrote:
Sat Jan 05, 2019 12:46 am
TimeRunner wrote:
Fri Jan 04, 2019 11:54 pm
It will be interesting to see how changes monthly distributions are actually implemented . The notes mention a new TSP-95 form. Hopefully it can be on-line and e-signature rather than mail-in wet signature. And, for those who are married, hopefully it wouldn't require spousal signature and notary. I am concerned it may end up that way, which would be cumbersome and not really address the issue.
TimeRunner,

We'll have to read the proposed rules carefully when they're published in the Federal Register and be sure to file public comments on them. At a minimum, I plan on urging the FRTIB to allow participants to make Roth conversions within their TSP accounts and to hold their regular TSP assets in different funds and/or different proportions than their Roth TSP assets. As for the latter point, most people will want to hold their Roth assets longer than their regular TSP assets, so they may want to focus Roth assets more towards the C, I, and S Funds.

MichDad
Please include tax-exempt contributions into your comments. Military personnel serving in a combat zone tax exclusion (CZTE) area can make tax-exempt contributions to TSP, which is TSP contributions of tax free pay. Tax-exempt contributions will never be taxed, but the growth on those contributions becomes traditional contributions (my tax-exempt balance never changes because I'm no longer able to contribute tax-exempt money). Like Roth, ability to hold that money in different funds would be helpful and in plan Roth conversions would be terrific. Here's how White Coat Investor converted his tax-exempt money to Roth https://www.whitecoatinvestor.com/how-t ... -roth-ira/
It's perfectly legal, go ask the IRS, they'll say the same thing. I actually feel stupid telling you this, I'm sure you would've investigated the matter yourself. Andy Dufresne

Spirit Rider
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Re: Improving the TSP [for current participants]

Post by Spirit Rider » Sat Jan 05, 2019 10:03 am

Removal of the age 59 1/2 age restriction for in-service rollovers of the after-tax account would be great. That would make tax exempt contributions even more valuable for career service members.

As it stands now, they make more sense for short-timers. They make the contributions and only have a few years of taxable earnings before discharge. A lifer may have several years to a decade or more. This makes tax-exempt contributions actually counter-productive.

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MichDad
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Re: Improving the TSP [for current participants]

Post by MichDad » Fri Apr 12, 2019 9:31 am

According to their February 2019 minutes, the Federal Retirement Thrift Investment Board remains on target to implement expanded withdrawal options on September 15, 2019. Here's a link to the Board's minutes, where this topic is discussed on pages 6-7:

https://www.frtib.gov/MeetingMinutes/2019/2019Feb.pdf

In addition, here's a link to a FRTIB staff PowerPoint presentation on the topic, page 5 of which contains an informative timeline:

https://www.frtib.gov/pdf/minutes/2019/ ... b-Att8.pdf

The public comment period on the new rules will commence on June 7, 2019.

MichDad

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Re: Improving the TSP [for current participants]

Post by FedGuy » Sat Apr 13, 2019 10:26 pm

The "TSP Highlights" notice included in current TSP statements notes that the TSP is FINALLY rolling out two-factor authentication!

I'm thrilled that they've finally done this. I don't know why they didn't do it a decade ago (or in 2015, when, in response to my question, they told me they were "working on it").

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Re: Improving the TSP [for current participants]

Post by VictoriaF » Sun Apr 14, 2019 9:27 am

MichDad wrote:
Fri Apr 12, 2019 9:31 am
According to their February 2019 minutes, the Federal Retirement Thrift Investment Board remains on target to implement expanded withdrawal options on September 15, 2019. Here's a link to the Board's minutes, where this topic is discussed on pages 6-7:
MichDad,

I am grateful for your updates. I should be following the TSP Board myself, but it frequently gets superseded by other things. Your messages are powerful reminders.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

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Re: Improving the TSP [for current participants]

Post by hoppy08520 » Sun Apr 14, 2019 10:22 am

VictoriaF wrote:
Sun Apr 14, 2019 9:27 am
MichDad wrote:
Fri Apr 12, 2019 9:31 am
According to their February 2019 minutes, the Federal Retirement Thrift Investment Board remains on target to implement expanded withdrawal options on September 15, 2019. Here's a link to the Board's minutes, where this topic is discussed on pages 6-7:
MichDad,

I am grateful for your updates. I should be following the TSP Board myself, but it frequently gets superseded by other things. Your messages are powerful reminders.

Victoria
I second that. Thanks MichDad for these updates, I appreciate it.

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MichDad
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Re: Improving the TSP [for current participants]

Post by MichDad » Sun Apr 14, 2019 1:13 pm

hoppy08520 wrote:
Sun Apr 14, 2019 10:22 am
VictoriaF wrote:
Sun Apr 14, 2019 9:27 am
MichDad wrote:
Fri Apr 12, 2019 9:31 am
According to their February 2019 minutes, the Federal Retirement Thrift Investment Board remains on target to implement expanded withdrawal options on September 15, 2019. Here's a link to the Board's minutes, where this topic is discussed on pages 6-7:
MichDad,

I am grateful for your updates. I should be following the TSP Board myself, but it frequently gets superseded by other things. Your messages are powerful reminders.

Victoria
I second that. Thanks MichDad for these updates, I appreciate it.
Thank you both. Please mark your calendars for June 17th, when the proposed regulations will be published for public comment. We need to make sure the paperwork involved with taking monthly or other periodic withdrawals of our money from our TSP accounts is not burdensome. I'd like to see the proposed forms, for example. Further, I want to press the FRTIB to move forward on allowing TSP participants to make in-plan Roth conversions as many private 401(k) plans do. They do not need Congress to enact new legislation to do this.

MichDad

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Re: Improving the TSP [for current participants]

Post by VictoriaF » Sun Apr 14, 2019 1:58 pm

MichDad wrote:
Sun Apr 14, 2019 1:13 pm
Thank you both. Please mark your calendars for June 17th, when the proposed regulations will be published for public comment. We need to make sure the paperwork involved with taking monthly or other periodic withdrawals of our money from our TSP accounts is not burdensome. I'd like to see the proposed forms, for example. Further, I want to press the FRTIB to move forward on allowing TSP participants to make in-plan Roth conversions as many private 401(k) plans do. They do not need Congress to enact new legislation to do this.

MichDad
I have marked my calendar for June 17th, but I hope we'll also have a discussion in the Forum, possibly, in this very thread.

In-plan Roth conversions are my top financial wish!

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

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Re: Improving the TSP [for current participants]

Post by MichDad » Sun Apr 14, 2019 4:14 pm

In-plan Roth conversions won’t be part of the proposed changes but this will be an excellent opportunity for us to let the FRTIB know how important this is to TSP participants.

MichDad

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Re: Improving the TSP [for current participants]

Post by autolycus » Sun Apr 14, 2019 6:47 pm

Allowing in-plan conversions would be great! What would it take to also allow post-tax deferrals to convert for the mega-Backdoor? Could the board do that through reg or does Congress have to do something?

And yes, MichDad, thanks for all the updates!

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Re: Improving the TSP [for current participants]

Post by Spirit Rider » Sun Apr 14, 2019 9:35 pm

autolycus wrote:
Sun Apr 14, 2019 6:47 pm
Allowing in-plan conversions would be great! What would it take to also allow post-tax deferrals to convert for the mega-Backdoor? Could the board do that through reg or does Congress have to do something?
It might sound like semantics, but terminology is important.

There are three types of employee contributions; pre-tax employee deferrals, post-tax designated Roth contributions and employee after-tax contributions. The later term is what you are referring to and is how they are defined in IRS 401k regulations. Plans sometimes refer to these as voluntary after-tax contributions and non-Roth after-tax contributions. A post tax deferral would usually be considered to refer Roth 401k contributions.

The TSP actually does allow employee after-tax contributions from tax-exempt pay in a combat zone, but they do not allow in-service rollovers prior to age 59 1/2. My understanding is that employee after-tax contributions of taxable income and in-service rollovers of the same would require congressional legislation.

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Re: Improving the TSP [for current participants]

Post by autolycus » Mon Apr 15, 2019 11:57 am

Spirit Rider wrote:
Sun Apr 14, 2019 9:35 pm
autolycus wrote:
Sun Apr 14, 2019 6:47 pm
Allowing in-plan conversions would be great! What would it take to also allow post-tax deferrals to convert for the mega-Backdoor? Could the board do that through reg or does Congress have to do something?
It might sound like semantics, but terminology is important.

There are three types of employee contributions; pre-tax employee deferrals, post-tax designated Roth contributions and employee after-tax contributions. The later term is what you are referring to and is how they are defined in IRS 401k regulations. Plans sometimes refer to these as voluntary after-tax contributions and non-Roth after-tax contributions. A post tax deferral would usually be considered to refer Roth 401k contributions.

The TSP actually does allow employee after-tax contributions from tax-exempt pay in a combat zone, but they do not allow in-service rollovers prior to age 59 1/2. My understanding is that employee after-tax contributions of taxable income and in-service rollovers of the same would require congressional legislation.
You're very right that the terminology is important, and I should absolutely have been more accurate in my use of it. I chalk it up to Sunday, Game of Thrones is back brain! :)

I figured it was something that would require legislation, but hoped otherwise. I've been pleasantly surprised by some of the additional changes that the board is pushing beyond what I remembered as being explicitly directed in the statutory changes.

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Re: Improving the TSP [for current participants]

Post by MichDad » Thu May 09, 2019 9:45 am

The Federal Retirement Thrift Investment Board has posted its March 2019 meeting minutes. The timeline for the "Additional Withdrawals Project" continues to be on track for going live on September 16th, with the public comment period set to commence on June 7th, less than one month from now. Mark your calendars.

Here's a link to the FRTIB's March minutes, with a discussion of the Additional Withdrawals Project on page 4:

https://www.frtib.gov/MeetingMinutes/2019/2019Mar.pdf

Here's a link to the associated staff PowerPoint on this topic, which contains a useful timeline on page 5:

https://www.frtib.gov/pdf/minutes/2019/ ... r-Att5.pdf

MichDad

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Re: Improving the TSP [for current participants]

Post by MichDad » Sat Jun 08, 2019 3:51 am

The Federal Retirement Thrift Investment Board has just published its proposed rules on "Additional Withdrawal Options" for the Thrift Savings Plan. Public comments are due on or before August 9, 2019. I haven't read them yet but I will in the next couple of days. Among the things I'll be looking for are making sure there it will not be administratively burdensome for participants to make withdrawals. Also, I plan on pressing the FRTIB to add a Roth conversion option as is offered by many private sector 401(k) plans. Here's a link to the proposed rules:

https://www.govinfo.gov/content/pkg/FR- ... dium=email

This is our opportunity to improve the TSP. Let's use it.

MichDad

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Re: Improving the TSP [for current participants]

Post by motorcyclesarecool » Sat Jun 08, 2019 6:32 am

I just reviewed it:
1. The spousal consent provisions are archaic and require notarized signatures. This will, of necessity, keep the processing of all requests on paper and therefore slow & inefficient. Will more paper submissions for more withdrawal options lead to increased costs? This doesn’t look like modernization. They should relax the spousal consent requirement and let us do the process online! I never encountered this for other employers’ §401(k) plans.

2. I see zero provision for in-service Roth conversions.

3. Unlimited age-based and hardship withdrawals might serve as a backdoor way to do in-service Roth conversions. Once the funds have left the Plan.

EDITED: moved an apostrophe.

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Re: Improving the TSP [for current participants]

Post by tadamsmar » Sat Jun 08, 2019 7:08 am

MichDad wrote:
Sat Jun 08, 2019 3:51 am
Among the things I'll be looking for are making sure there it will not be administratively burdensome for participants to make withdrawals.
I am not sure exactly what you are referring to here. TSP withdrawals are relatively difficult because they can't be made online. They involve paper forms and may take weeks.

The TSP used to allow online withdrawals but some participants had losses due to unauthorized withdrawals. So they reverted to a 100% paper form system.

There is an issue concerning reimbursement if someone steals your login credentials. The TSP and FederalDirect have always had the position that the participant is responsible for losses in this circumstance.

Vanguard and some other fiduciaries provide reimbursement guarantees to participants who are not negligent. I am not sure how iron-clad these guarantees are, but they seem to be better than "you are on your own, buddy".

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Re: Improving the TSP [for current participants]

Post by stan1 » Sat Jun 08, 2019 7:52 am

I don't think I saw this posted yet, sorry if it is a duple. The RFP is out for the new fund managers. They proceeded with the two manager approach. Both of the managers will get portions of the C, S, I, and F Funds.

https://www.govexec.com/pay-benefits/pa ... oref=river

Believe there are multiple things they can do here to incentivize long term competition, such as award 25% of the assets to each company and then award the other 50% based on which offeror achieves the lowest cost and lowest tracking error. Hopefully they also set it up with 100% of securities revenue lending income coming back to fund participants.

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Re: Improving the TSP [for current participants]

Post by TimeRunner » Sat Jun 08, 2019 9:55 am

This is just what I was fearing upthread in our big thread, and it makes using the TSP very cumbersome and old fashioned.

It sounds like what they are proposing is that once you send in a new form with new withdrawal option or installment payment change, which would require spousal signature and notary, you may make additional changes within 90 days without spousal signature/notary but spouse will still be notified. After 90 days a change will require a new form with spousal signature and notary. That's how I read this, but I could be wrong. It's a little vague.

I don't see why there cannot be a form for the spouse to sign that, until superseded by the spouse, the spouse agrees to waive all approval requirements. The spouse can still be notified when withdrawal options or installment payment amounts are changed. Thus, there would be a hopefully one-time spousal waiver, after which online changes to withdrawal options or amounts could be processed without paper forms, notary, and other overhead.

For annuitants, Fido, Schwab, Vanguard, etc, still look like better alternatives than keeping everything-but-G-Fund money in the TSP, unless they change the rules.
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Re: Improving the TSP [for current participants]

Post by MichDad » Sat Jun 08, 2019 12:47 pm

TimeRunner wrote:
Sat Jun 08, 2019 9:55 am
I don't see why there cannot be a form for the spouse to sign that, until superseded by the spouse, the spouse agrees to waive all approval requirements. The spouse can still be notified when withdrawal options or installment payment amounts are changed. Thus, there would be a hopefully one-time spousal waiver, after which online changes to withdrawal options or amounts could be processed without paper forms, notary, and other overhead.

For annuitants, Fido, Schwab, Vanguard, etc, still look like better alternatives than keeping everything-but-G-Fund money in the TSP, unless they change the rules.
As always, I agree completely with TimeRunner.

During her career, my wife had three separate 401(k) accounts with three different employers. Last year, after she retired, she moved all three 401(k) accounts to IRAs and Roth IRAs with Merrill Edge and Schwab, collecting nice transfer bonuses. In no case was I required to sign off on any of this. Given that this was money she saved through her employment, I was perfectly fine with that. Likewise, I see no reason why my wife should be able to stop me from using, as I see fit, the money I saved in my TSP account. So, my first point is that spouses, lacking a court order, should have no right to block TSP participants from doing whatever they want with their TSP accounts. Imagine, please, a case where a married couple is separated or living far apart. It could be difficult to obtain the spousal waiver. Even more problematic is the situation where the spouses don't get along. A spouse can block the TSP participant from making any TSP withdrawals.

If this is too radical for the Federal Retirement Thrift Investment Board, a second best solution is the one TimeRunner has outlined -- a general spousal waiver that can be withdrawn any time. That could work if the spouses get along.

I hope TSP participants will comment to the FRTIB that they want the ability to make Roth conversions within their accounts. This is less important to me, now that I'm retired. But, it will be important to those TSP participants who are still working and saving for retirement.

I also agree that after the new withdrawal rules take effect in mid-September, I'll withdraw all of my Roth TSP and everything else except my non-Roth G Fund and move those assets to one or more low cost brokerages that will give me significant transfer bonuses. Other than the G Fund, I see no reason to retain retirement assets in the TSP.

MichDad

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Re: Improving the TSP [for current participants]

Post by stan1 » Sat Jun 08, 2019 1:04 pm

There is an issue concerning reimbursement if someone steals your login credentials. The TSP and FederalDirect have always had the position that the participant is responsible for losses in this circumstance.
I think it is more than a position. They don't have the legal authority to do anything else. You'd have to go to court and win. Agree it is one of several reasons in addition to the ones also mentioned above to move money elsewhere once eligible to do so.

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Re: Improving the TSP [for current participants]

Post by SquawkIdent » Sat Jun 08, 2019 1:30 pm

MichDad wrote:
Sat Jun 08, 2019 12:47 pm
TimeRunner wrote:
Sat Jun 08, 2019 9:55 am
I don't see why there cannot be a form for the spouse to sign that, until superseded by the spouse, the spouse agrees to waive all approval requirements. The spouse can still be notified when withdrawal options or installment payment amounts are changed. Thus, there would be a hopefully one-time spousal waiver, after which online changes to withdrawal options or amounts could be processed without paper forms, notary, and other overhead.

For annuitants, Fido, Schwab, Vanguard, etc, still look like better alternatives than keeping everything-but-G-Fund money in the TSP, unless they change the rules.
As always, I agree completely with TimeRunner.

During her career, my wife had three separate 401(k) accounts with three different employers. Last year, after she retired, she moved all three 401(k) accounts to IRAs and Roth IRAs with Merrill Edge and Schwab, collecting nice transfer bonuses. In no case was I required to sign off on any of this. Given that this was money she saved through her employment, I was perfectly fine with that. Likewise, I see no reason why my wife should be able to stop me from using, as I see fit, the money I saved in my TSP account. So, my first point is that spouses, lacking a court order, should have no right to block TSP participants from doing whatever they want with their TSP accounts. Imagine, please, a case where a married couple is separated or living far apart. It could be difficult to obtain the spousal waiver. Even more problematic is the situation where the spouses don't get along. A spouse can block the TSP participant from making any TSP withdrawals.

If this is too radical for the Federal Retirement Thrift Investment Board, a second best solution is the one TimeRunner has outlined -- a general spousal waiver that can be withdrawn any time. That could work if the spouses get along.

I hope TSP participants will comment to the FRTIB that they want the ability to make Roth conversions within their accounts. This is less important to me, now that I'm retired. But, it will be important to those TSP participants who are still working and saving for retirement.

I also agree that after the new withdrawal rules take effect in mid-September, I'll withdraw all of my Roth TSP and everything else except my non-Roth G Fund and move those assets to one or more low cost brokerages that will give me significant transfer bonuses. Other than the G Fund, I see no reason to retain retirement assets in the TSP.

MichDad
+1

This is a big disappointment. While the changes going in shortly are a start, they are far from optimal.

In the contribution phase I would rate the TSP as an A. But in the withdrawal phase I would give it a C. Paper forms? Are you serious, it's 2019. Lots of other options and transfer bonus's await you.

Except for your G fund allocation, I see no reason to keep the other money in the TSP after retirement as long as you are over 59 1/2. By then the underage penalties are removed as well as the 72T hoops. Then you are free to move to an IRA and do as you like with YOUR money. :sharebeer

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Re: Improving the TSP [for current participants]

Post by ChrisC » Sat Jun 08, 2019 1:36 pm

I think there is a Federal law mandating spousal sign off of retirement distributions, which, as I recall, occurred in the aftermath of egregious cases of military and civilian spouses being left penniless when the serviceman or Federal employee did not provide for a spousal annuity in retirement or left the spouse off as a retirement beneficiary. I recall these were well publicized cases in the late 70’s championed by Congresswoman Schroeder of CO. The law does not apply to private retirement plans.
So, even if you borrow from the TSP, a spouse is required to sign off!

In my case, I have a 2 comma balance in a separate 401K plan, in which my spouse has no consent requirements. I plan to roll this 401k plan over to my 6 figure TSP plan because all distributions from TSP in my state are exempt from State income taxes. So, my spouse will have to sign off on all of my future TSP distributions, including those from funds that originated outside of Federal retirement plans. It might be a pain to bother with consents but I can live with that.

On the issue of in plan Roth conversions, it’s not a big deal to me, as I plan to move funds out of TSP, whether or not Roth, and convert/rollover to a Roth IRA. In plan conversions don’t really help, if you want to avoid RMDs and plan to use the Roth as a legacy play.

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Re: Improving the TSP [for current participants]

Post by MichDad » Sat Jun 08, 2019 1:39 pm

SquawkIdent,

You make a good point. After participants transfer assets from the TSP to an IRA or a Roth IRA, there's no need for further spousal approval to move or spend funds (from the IRAs). The limitations remaining on TSP withdrawals after this proposed modest improvement are indeed frustrating.

MichDad

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Re: Improving the TSP [for current participants]

Post by mrc » Sat Jun 08, 2019 2:02 pm

DW and I have both stopped working, and spouse transferred all but a few thousand dollars from her (sizable) TSP into her TIAA 403b. I moved my employee 401k (from a financial services company no less) into my TIAA account as well. Both moves required some Notary efforts, and a couple weeks to complete the TSP move. Our fairly small Roths are with Fidelity.

Now, we have cross POAs for each other with TIAA. Either one of us can transact on the other's accounts. RMDs, when the time comes will be a snap to set up online. I truly hope TSP eventually implements convenient and flexible conversion and withdrawal options. But since we qualify for Vanguard Institutional funds because of the size of our former employer, we decided not to wait.
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Re: Improving the TSP [for current participants]

Post by Blues » Sat Jun 08, 2019 2:16 pm

Biggest reason for me to keep funds in the TSP other than access to the "G" fund is that I will not be taxed by my state of residence when I begin RMDs several years down the road. Those two factors make staying put an easy decision.
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Re: Improving the TSP [for current participants]

Post by ChrisC » Sat Jun 08, 2019 2:38 pm

SquawkIdent wrote:
Sat Jun 08, 2019 1:30 pm
In the contribution phase I would rate the TSP as an A. But in the withdrawal phase I would give it a C. Paper forms? Are you serious, it's 2019. Lots of other options and transfer bonus's await you.
Paper forms are for everything unless you're able to have electronic notaries, electronic signature gurarantees, or electronic witness sign-offs. And I guess if an electronic signature were only required, many custodians probably can't be bothered with investing in the software or the potential headaches with implementing electronic signatures.

It's not just TSP but every other fiduciary/custodian that requires this for many transactions. Try getting electronic authorization for agency trading for your spouse's brokerage account or try executing a POA electronically -- I don't believe that exists without a paper chain of approvals. For transfers of funds from one HSA to another (or for getting a return of excess HSA contributions), this is all done with paper and signatures, and on the several occasions that this was done, I couldn't scan and electronically send the forms! And for those transfers, my spouse wasn't even in the picture.

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Re: Improving the TSP [for current participants]

Post by HIinvestor » Sat Jun 08, 2019 2:41 pm

Here’s the pdf TSP put out explaining the upcoming changes in 9/15/2019. I found it easier to read and understand.

https://www.tsp.gov/PDF/formspubs/tspfs10.pdf

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Re: Improving the TSP [for current participants]

Post by SquawkIdent » Sat Jun 08, 2019 3:05 pm

HIinvestor wrote:
Sat Jun 08, 2019 2:41 pm
Here’s the pdf TSP put out explaining the upcoming changes in 9/15/2019. I found it easier to read and understand.

https://www.tsp.gov/PDF/formspubs/tspfs10.pdf
Please correct me if I'm wrong but these two points continue to really jump out at me.

1. One partial withdrawal every 30 days. Not more often than that.

2. Those withdrawals will still need to be completed partially via paper form and mailed in.

Meanwhile I can transfer my non G money to Vanguard and withdraw as many times as I wish in 30 days, it takes about 15 seconds to do online and the :moneybag will be in my checking account in 2 days.

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