Another article you may find interesting by FedSmith…
Your TSP Investment: Where’s the Money Going and Why Do ‘They’ Care?
A number of recent mainstream media articles tout the ‘great benefits’ afforded Thrift Savings Plan (TSP) participants who elect to transfer some, or all of their funds out of TSP. Articles repeating a “low fee” mantra have appeared in several prominent publications, including: Bloomberg (Aug 2014), The Washington Post (Sept 2014), and CNN Money (Oct 2014). TSP officials echo and underscore the same “low fee” motto. Apparently the way TSP sees it, their fees are so low that no one should consider withdrawing or transferring them elsewhere.
According to TSP officials, 45 percent of participants who left their federal jobs in 2012 withdrew their entire account within the next year—a total of $10 billion in 2013. “There’s a good chunk of our participants that are firing us and one of the reasons for it is a desire for more investment flexibility,” Long told the board at its November monthly meeting in Washington.
Really? A “good chunk”? Actually, $10 billion of what was a total balance of around $400 billion in 2013 amounts to less than 3% of the total funds – which hardly seems like a “chunk” (much less, a good one). A closer look at the funds withdrawn shows that nearly half were cash withdrawals – meaning the participant had the funds sent directly to them, paid the taxes, and then used the proceeds to pay off their mortgage, eliminate other debt, take a trip around the world, or do anything else they were inclined to do with the money. And, of course, it is their money to do with as they please….
