TSP Gets Serious about Investment Window

The TSP is now actively looking into allowing participants to put some of their money in outside investment funds—an authority it has had since 2009 but has not put it in place. With the approval of its governing board, the TSP will study the issue for a projected six to nine months, looking at how such a system could be put in place and what features it would have. It conducted a limited study earlier this year but a major reason for the new movement is survey results showing substantial interest among participants in having a wider range of investment options—and relatedly, that the current limited choice is a main reason that nearly half of those who separate from federal employment transfer their money into accounts such as IRAs rather than stay with the TSP. The TSP presented preliminary ideas—for example, that those who invest through the “window” would be charged a $100 annual fee and that such investments would be limited to 25 percent of an account—to an advisory group of employee organizations last week and to the governing board this week. Both expressed openness to the change but before a final decision is reached, those and many other issues would need to be addressed in detail. The TSP projects that it will take the issue to both the advisory board and the governing board again, although only the latter can decide whether to proceed. If it approves, another 18-24 months would be needed to make an investment window operational.