The TSP’s recent transition to a new recordkeeper and the availability of the TSP window did not happen without many snags – but a more secure, modern system is now in place.
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After debates with Congress over international investments, disagreements regarding ESG funds with the DOL, and a blackout period many TSP participants found at the least inconvenient, the transition to the new TSP online system has been completed. To use the TSP’s own phrase, it took a “magnitude of effort” to successfully transfer recordkeepers for the world’s largest defined contribution plan. This entailed transferring 26.3 billion records for 6.6 million TSP participants. Agency leaders at the TSP even made attempts to warn federal employees, retirees, and beneficiaries that the switch would be “bumpy.”
At the end of the day, TSP accountholders now have a retirement plan with features that several groups of federal employees have been clamoring for over the past decade or so. These changes include a more secure, digital-friendly website, more investment options (including ESG funds, more international funds, and around 5,000 other new mutual funds to choose from), and something that younger feds frequently requested – a new mobile app. All that being said, there were definitely some “bumps” on the road.
Issues During the TSP Transition
The fact that TSP accounts are accurate after the transition is an accomplishment in itself. The one problem reported is in regard to some beneficiary information that didn’t move over properly from the previous online recordkeeping system, but TSP will honor beneficiary information in the old system while it works to fix this problem in the new system. As well, there were some reports of users not being able to access previous statements, but this issue as is also getting handled. TSP participants should be able to have access to the last 10 years’ worth of statements. There were snags hit when moving some statements over, but that issue has supposedly been resolved.
More serious headaches reported by users of the new online system included delayed withdrawals, miscalculated loan amounts, and some cash distributions not getting sent out altogether. Importantly, though, TSP investments and contributions have transitioned to the new system successfully. On the first day the new recordkeeping system had to handle government paycheck contributions, it efficiently processed 4.6 million transactions involving $1.6 billion from payroll contributions from feds.
Of course, the efficiency of the new tools are useless if you can’t set-up your online account on the new website. Many complaints following the TSP transition have revolved around not being able to log-in or set-up an account on the updated version of TSP.gov. Another concern is that the design and layout of the site is so wildly different from the previous iteration that many aren’t even sure they’re on the right website. (You should definitely make sure the URL contains “TSP.gov” before entering any personal or log-in information! Don’t get scammed by a fake site!) There have also been some users to complain about the chatbot AVA, mostly stating the feature is hard to find and once located, not very helpful. And because of the numerous headaches that TSP users might be experiencing because of the transition, the service centers are flooded with calls, meaning it could take over an hour or two to reach a real representative from the Thrift Savings Plan.
What’s Up With the Window?
The TSP mutual fund window is open. However, this has not been without headaches and snags, too. There are two annual fees that must be paid to access the window, totaling $150. Reports from TSP users have indicated that viewing the list of actual mutual funds in the TSP window does not seem to be possible until these two fees have been paid. A minimum of $10,000 must also be transferred to the window in order to have access, but it is unclear if this transfer needs to happen before the actual investment funds can be reviewed and chosen. Obviously, with the costs involved with opening the mutual fund window, the decision to do so becomes more difficult if the actual investment options can’t be evaluated until access to the window has been granted.
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Until Next Time,
**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.
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