TSP participants roll over record amount of investments

Tuesday - 4/13/2010, 8:15pm EDT

Tom Trabucco, Federal Retirement Thrift Investments Board

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By Dorothy Ramienski
Internet Editor
Federal News Radio

Thrift Savings Plan participants last month rolled over a record $66.4 million of their outside, pre-tax retirement savings into the government's 401(k) plan.

Tom Trabucco is Director of External Affairs for the Federal Retirement Thrift Investments Board and explains why there has been such a jump.

"I think people are becoming more and more aware of the fact that you can consolidate your money in the TSP. It may have something to do with it being tax time, and people taking a look at their 401(k)'s and IRA's and all of that and thinking -- maybe I should consolidate.

"Maybe it's the Lifecycle funds, which I know have again reached an all-time high. They continue to grow with more participants participating in them, and more participants putting 100 percent of their funds in them.

"[There is also] the idea of diversification and making sure that you're getting the most out of your investments and not simply duplicating funds in different areas and different places."

The TSP is gearing up for the start of automatic enrollment, which will also increase investment in the funds overall. More investors means more money for investment, which increases the opportunities for everyone.

"This is a phenomenon that we've seen -- every time we improve the TSP and put a new feature in, everyone kind of stops and takes a look -- 'should I take advantage of this now? Is now the time to get in?' and I'd guess that what we'd say is that there's never a bad time to get in."

In order to move money from another account into the TSP, a participant must fill out the Form TSP-60. The administrator of the fund must sign the form, cut the check and send the form to the TSP. Trabucco explained that it's a fairly simple process.

"It goes right into your account with the same allocation as any payroll contributions you're making. If you're putting 50 percent in the C fund and 50 percent in the G fund, that's how your rollover will be invested, as well."

News about the Dow Jones Industrial Average has been good so far this week, but Trabucco reminded investors that the Board looks at much more than that.

"The Dow is only 30 big companies. What we look at here are the broader indexes. The S&P 500, which, as its name implies, follows 500 stocks. We have the Wilshire Completion Index, which is the rest of the domestic stock in the United States. Those are in the S fund. Between the two of those, we have all of the stocks -- including the 30 in the Dow. . . . So, you have the whole domestic market. The I fund is the Morgan Stanley index [and] has stock markets from 21 developed countries. Then we have the F fund -- the fixed income fund -- the bond fund."

With those five funds, Trabucco said, a TSP investor has the choice of investing in all available asset classes that are suitable for investment in a fund such as the TSP.

He added that there is no plan to move into other types of investment at this time.

"Our view is, we should stick with the broad funds. We have had our investment consultant take a look, and [they] agree that we should stay with the broader index funds, along with our Lifecycle funds. It doesn't mean that, at some point in the future, we might not have some smaller funds. Congress gave us authority to start up a mutual fund window. That would be a way to access some of the narrower types of funds that are out there, but we're not at that point yet."