TSP Update
At the regular monthly meeting of the Federal Retirement Thrift Investment Board (FRTIB), the federal government’s Thrift Savings Plan (TSP) has about 2.6 million participants with Roth assets. While 37% of TSP participants are members of the uniformed services, they account for about 60% of accounts with a Roth balance.
TSP participants are using the TSP mobile app. 21% of logins to the “My Account” feature of the TSP were through the TSP app. This is a 40% jump from six months ago.
The TSP mobile app has had about 79,000 new downloads as of May 21, 2024.
Waiting Time for Withdrawals and Rollovers into the TSP
As of May 15, 2024, the 30-day waiting period between withdrawal requests has been removed. If a TSP participant requests a withdrawal from a TSP account, there is no longer a 30-day waiting period requirement before requesting another withdrawal. The TSP writes that this change “is part of our ongoing efforts to make the TSP a simple and convenient place for you to manage your retirement income.”
A rollover into the TSP refers to moving money from eligible retirement plans or individual retirement accounts (IRAs) into an existing TSP account. Rollovers are often from an IRA or another 401(k) plan. The TSP has a do-it-yourself feature for rolling money into the TSP and a concierge service available. 41% of the do-it-yourself rollovers used the TSP mobile app to scan checks.
In the first four months of 2024, 22,462 checks rolled into the TSP totaling about $1.3 billion. For the same period in 2023, 12,675 checks totaling 562 million rolled into the TSP. Whether rolling money from another source into the TSP is a good idea often depends on an individual’s situation.
TSP Fund Performance Month-to-Date and Year-to-Date
So far in May, the TSP returns have been very good. The S Fund is often the more volatile stock fund as it invests in smaller companies. So far in May, the S Fund has the best return in the month (6.08%) but the C Fund has had the best return among all TSP funds so far in 2024 (11.90%).
| Fund | Month-to-Date | Year-to-Date |
|---|---|---|
| G Fund | 0.26% | 1.67% |
| F Fund | 1.83% | -1.43% |
| C Fund | 5.53% | 11.90% |
| S Fund | 6.08% | 6.09% |
| I Fund | 5.67% | 8.41% |
| L Income | 1.72% | 3.60% |
| L 2025 | 2.10% | 4.26% |
| L 2030 | 3.57% | 6.44% |
| L 2035 | 3.90% | 6.88% |
| L 2040 | 4.23% | 7.35% |
| L 2045 | 4.51% | 7.74% |
| L 2050 | 4.77% | 8.15% |
| L 2055 | 5.61% | 9.81% |
| L 2060 | 5.61% | 9.81% |
| L 2065 | 5.61% | 9.81% |
Changes to the I Fund
Another item regarding the Thrift Savings Plan: The I Fund is in the process of changing its benchmark from the MSCI EAFE Index to the MSCI ACWI IMI ex USA ex China ex Hong Kong Index. BlackRock and State Street have independently coordinated with MSCI to develop transitional benchmarks.
Why Has the Stock Market Gone Up This Month?
Inflation is still with us as investors face higher prices daily but the stock market is higher. In one of the hard-to-predict scenarios in the stock market, the market has moved higher since the latest inflation report was released. Inflation is still going up but the rate of the increase in inflation has gone down. Interest rates are holding steady despite earlier expectations that the Federal Reserve would start reducing rates.
Why has the stock market gone higher? Perhaps because there is still hope for a “soft landing” with the economy avoiding a recession. So far, the economy has also avoided “stagflation“—a time when the inflation rate is high or going up, the economic growth rate slows and unemployment remains high. The last bout of inflation was in the 1970’s with rapid inflation, high social spending while paying for the Vietnam War, and high unemployment.
Perhaps the market is going up because it would have been worse with inflation rapidly increasing, stagflation could have occurred, and fear that we would be in a recession by now have not occurred. At least for now, investors are still optimistic and hoping for more good news enabling stocks to continue to move higher.
