Juliet Capulet, in Act 2, Scene 2 of William Shakespeare’s tragedy Romeo and Juliet, asks: “What’s in a name? That which we call a rose by any other name would smell as sweet.” The TSP apparently asked the same question in Act 1 of their new comedy The Latest TSP Changes.
What’s a “contribution allocation?” If we call it an “investment election”, it will still specify how you want to invest new money in your Thrift Savings Plan account. The TSP also calls this action a “contribution election” (seems like a mixture of contribution allocation and investment election) at places in TSP publications.
What’s an “interfund transfer?” If we call it a “reallocation” or a “fund transfer”, it will still specify what you want to do with money that is already invested in your TSP.
One might ask what the difference is between a reallocation and a fund transfer. According to the TSP’s booklet tspbk08.pdf (Summary of the Thrift Savings Plan) a reallocation moves the money already in your account among the TSP investment funds. A fund transfer moves money from one or more specific funds to another specific fund or funds without affecting the rest of your account. They sure sound alike to me, but the TSP apparently sees enough of a difference to require the use of two new terms. Why use one term (interfund transfer) when two terms (reallocation and fund transfer) will do?
Despite the new name(s), reallocations and fund transfers are subject to the same limits that previously applied to interfund transfers. That is, after your first two reallocations or fund transfers each month, for the remainder of the month you can only use reallocations or fund transfers to move money into the G Fund.
If you want to understand how the TSP works after the recent changes, do yourself a favor and download a copy of the Summary of the Thrift Savings Plan. It was revised in May 2022 and includes information on the mutual fund window and other TSP changes.
Did you know?
• Your TSP account can be divided in an action for divorce, annulment, or legal separation;
• It can be garnished to satisfy a legal process associated with past-due alimony, child support obligations, or IRS levy.