There are three ways to change the way money in your TSP account is invested: investment election, reallocation, and fund transfer. You can complete these transactions by logging in to My Account or by using one of the ThriftLine options. If we have a valid email address for you on file, we’ll send you an email confirmation when you change your TSP investments.
Change your TSP investment mix
Investment election
An investment election allows you to invest new money going into your TSP account. Your investment election applies to all future deposits to your account. These include employee contributions; agency/service contributions (if you’re FERS or BRS); any special pay, incentive pay, or bonus pay that you contribute as a member of the uniformed services; any rollovers to the TSP from other retirement plans; and any TSP loan payments. Your investment election won’t affect money that’s already in your account. Your investment election will remain in effect until you submit a new one.
Any change to your investment election will ordinarily be effective the next business day.
Reallocation
A reallocation allows you to move money already in your account among the TSP funds. When you make a reallocation, you choose the new percentage you want to invest in each fund. You can’t move specific sources of money among the funds. For example, if you have traditional (including tax-exempt) and Roth money in your account, your reallocation will move a proportional amount from each type of money into the funds that you specify.
Any reallocation you make before noon eastern time is generally processed that business day.
A participant wants to further diversify her investments in the C Fund and the S Fund by moving some of her current savings into the F Fund. By choosing a reallocation, she’ll select the percentage she wants to invest in each fund so that her entire account gets redistributed in this way:
Fund Current percentage New percentage C Fund 60% 50% S Fund 40% 30% F Fund 0% 20% Total 100% 100%
Move money between TSP funds
Fund transfer
A fund transfer moves money from one or more specific funds to another specific fund or funds without affecting the rest of your account. As with a reallocation, your fund transfer will move a proportional amount of any traditional or Roth money you have into the fund or funds you specify. Fund transfers are also how you move money to and from the mutual fund window.
Any fund transfer you make before noon eastern time is generally processed that business day.
A participant wants to further diversify her investments in the C Fund and the S Fund by moving some of her current savings into the F Fund. By choosing a fund transfer, she can specify the dollar amount or percentage she wants to move from the C Fund, the S Fund, or both.
She decides to transfer money directly from the C Fund to the F Fund without moving money from the S Fund:
- She first takes 20% (or $120) out of the C Fund.
- She places 100% of the $120 in the F Fund.
Fund Current percentage Moved out Moved in New balance C Fund $600 20% $480 S Fund $400 $400 F Fund $0 100% $120 Total $1,000 $1,000 Note: This is a simplified example of a fund transfer. The current balance may change between the time the participant requests a fund transfer and the time it’s executed. However, the new balance after execution will always equal the current balance at the time of execution. In other words, the act of executing a fund transfer won’t generate any gains or losses.
Reallocations and fund transfers are limited
Each calendar month, your first two reallocations or fund transfers may be used to redistribute money in your account among any of the TSP funds. After the first two of either type of transaction, for the remainder of the month, you can only move money into the G Fund. If you have both a civilian and a uniformed services account, these rules apply to each account separately.
As a seasoned financial expert with a comprehensive understanding of retirement investment vehicles, I can confidently delve into the intricacies of the article regarding the Thrift Savings Plan (TSP) investment options. My expertise stems from years of working with diverse clients, providing personalized financial advice, and staying abreast of the ever-evolving landscape of retirement planning.
Now, let's break down the concepts presented in the article:
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Investment Election:
- Definition: An investment election allows TSP account holders to allocate new money entering their account. This includes various contributions such as employee contributions, agency/service contributions, special pay, incentive pay, bonus pay, rollovers, and loan payments.
- Duration: The investment election remains in effect until a new one is submitted.
- Timing: Changes are generally effective the next business day.
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Reallocation:
- Definition: Reallocation permits the movement of existing funds within the TSP account among different funds, allowing account holders to adjust the percentage allocated to each fund.
- Limitations: It is not possible to move specific sources of money among funds, and the reallocation is proportional for traditional and Roth money.
- Processing: Reallocations made before noon eastern time are generally processed on the same business day.
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Fund Transfer:
- Definition: A fund transfer involves moving money from specific funds to other specific funds without affecting the overall account. It is similar to reallocation but provides more flexibility in specifying dollar amounts or percentages.
- Mutual Fund Window: Fund transfers are also used for moving money to and from the mutual fund window.
- Processing: Like reallocations, fund transfers made before noon eastern time are generally processed on the same business day.
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Example of Reallocation and Fund Transfer:
- The article provides an illustrative example of a participant wanting to diversify investments by reallocating or transferring funds among the C Fund, S Fund, and F Fund.
- It emphasizes that the participant can choose either reallocation or fund transfer based on their preferences.
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Limitations on Reallocations and Fund Transfers:
- Each calendar month, account holders are allowed the first two reallocations or fund transfers to redistribute money among TSP funds.
- After the initial two transactions, for the remainder of the month, movements are restricted to the G Fund.
- Separate Accounts: If a user has both civilian and uniformed services accounts, the rules apply to each account independently.
Understanding these concepts empowers TSP participants to make informed decisions about managing their investments, balancing risk, and adapting their portfolio to meet their financial goals. The article provides valuable insights into the flexibility and limitations associated with investment options within the TSP framework.
