TSP to Open Window to Outside Investing

The TSP has formally committed to offering participants the option of investing in outside mutual funds through an investment “window,” which would represent the most significant change in investment options since the program was created nearly 30 years ago. The next step is for the TSP to solicit and issue a contract under which a mutual fund provider would make its offerings available to participants. There will be no restrictions on which of that company’s funds an investor could choose; the TSP earlier considered, but has decided against, setting standards of its own. However, only offerings of that company would be available (and only mutual funds, as opposed to individual stocks, for example); there will be restrictions on how much of a TSP account could be invested through the window, potentially 25 percent; and those who use the option will be charged a fee that is yet to be determined. The need to go through the contracting process, make technical changes to systems, issue policies and conduct an educational campaign likely means the option won’t actually be available for more than a year, and more possibly two years. The TSP received authority to create the investment window in a 2009 law, but the authority sat on a back burner until last year when the TSP started growing concerned about account holders who transfer their money out after separating, willing to pay higher investment costs elsewhere in exchange for a greater flexibility. A series of studies and presentations culminated in a vote Monday by the TSP’s governing board to go ahead.