TSP Mutual Fund Window

Rules for new mutual fund window were recently proposed by the FRTIB. Here’s what we know so far.




The new mutual fund window that will be available to TSP accountholders is on track to open up this “summer,” according to a publication released by the FRTIB (Federal Retirement Thrift Investment Board) on January 26th.

What is the Mutual Fund Window?

The “window” is a “self-directed brokerage account” that will vastly expand the investment choices in the TSP. It will be distinct from the existing investment choices, known as the “core” funds (G, F, C, S, and I) and the lifecycle funds (“L” funds), which are comprised of the core funds. These five funds are evaluated by fiduciaries to ensure the investments within the fund remain “prudent” – a requirement that is not placed on the mutual funds inside the new window. TSP participants that utilize the upcoming window will be able to put TSP money in a variety of investment categories. From the thousands of choices that are expected to be offered, investors will be able to buy and sell mutual fund shares of their choosing. Although the specific mutual funds are still unknown, it is known that ESG funds will be available, and funds led by more diverse fund managers.

Looking at similar self-directed accounts currently available in 401(k)s in the private sector, it is expected that the window will include funds of investment types not currently available in the TSP’s core. Depending on what allocation of mutual funds are chosen, the window will offer TSP investors opportunities for greater returns, but these opportunities could also carry more risk.

Minimum and Maximum Allowed

When first moving money from TSP core funds to the mutual fund window, a participant will only be allowed to move 25% of their total TSP balance. On that initial transfer, there will also be a minimum amount of $10,000 enforced, meaning those with a TSP balance less than $40,000 won’t be able to access the new investment options. Additional transfers cannot push the total amount invested via the window over 25% of the total TSP balance. These transfers from the core funds will be included as part of the rule already in place, allotting 2 intra-fund transfers monthly. For a given month, after two total transfers either between core funds or between the core and the window, the only transfers allowed have to be movements into the G Fund. (So any transfer to the G fund is allowed and doesn’t count towards the 2-transfer limit.)

When money is moved into the new self-directed account, it will be placed in a money market mutual fund and from there, the TSP account owner can buy and sell within the window. The number of trades will not be limited by number, but by price as there will be a per-transaction fee, which is not charged when transferring between just the core funds.

Fees and Expenses

In addition to the cost of the core TSP funds, there will be several costs associated with the window for those who choose to use it. One significant fee to consider before opening a self-directed brokerage account is the per-transaction fee, which will be set at $28.75 per trade.

There will also be an annual fee to maintain access to the window. This cost will have two components, a $95 maintenance fee and another cost, currently proposed at $55 annually, which aims to keep expenses low for maintenance pertaining to the core funds. This gives a total of $150 per year.

On top of these costs, there are also expenses stemming from the individual mutual funds that an investor chooses to put their cash in. The core funds come with expenses as well, but those have been traditionally low, even despite slightly rising recently.


Until Next Time,

Benefits Ben, STWS

**Written by Benjamin Derge, Financial Planner, ChFEBC℠ The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Benjamin Derge and not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Expressions of opinion are as of this date and are subject to change without notice. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors.

***The Thrift Savings Plan (TSP) is a retirement savings and investment plan for Federal employees and members of the uniformed services, including the Ready Reserve. The TSP is a defined contribution plan, meaning that the retirement income you receive from your TSP account will depend on how much you (and your agency or service, if you're eligible to receive agency or service contributions) put into your account during your working years and the earnings accumulated over that time. The Federal Retirement Thrift Investment Board (FRTIB) administers the TSP.***


TSP Mutual Fund Window

New TSP Mutual Fund Window