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Military Finances 301: TSP Mutual Fund Window Thumbnail

Military Finances 301: TSP Mutual Fund Window

TSP

One of the complaints I often heard about the Thrift Savings Plan (TSP) was the investment options. I'm not sure whether I agree with that or not. But someone at TSP definitely heard it and took action. Enter the Mutual Fund Window. What is it? How does it work? Let's check it out.

What is the TSP Mutual Fund Window?

Prior to the Mutual Fund Window, you had essentially 5 choices for investments (the G, F, C, S and I Funds or combinations of them in the Lifecycle Funds) inside TSP. The Mutual Fund Window now allows you to invest in commercially available mutual funds from major investment companies inside TSP as well.

Are There Requirements to Invest in the TSP Mutual Fund Window?

Yes. Obviously, you need to be participating in TSP. Then, your initial investment must be at least $10,000. At the same time, your initial investment can't exceed 25% of your total TSP balance. In essence, that means your TSP account must be worth at least $40,000 before you can think about using the Mutual Fund Window.

How Much do I Pay to Use the TSP Mutual Fund Window?

There are two levels of fees with the TSP Mutual Fund Window.

Annual Fees

  • A $55 annual administrative fee
  • A $95 annual maintenance fee
  • Total annual fees = $150

Recurring Fees

  • $28.75 per-trade transaction fee (for both buys and sells)
  • Mutual fund internal expense ratios

Should I use the TSP Mutual Fund Window?

I've always said you can build an adequately diversified portfolio in TSP (prior to the Mutual Fund Window) but you can build a more precisely diversified portfolio with mutual funds and ETFs. With that said, I think the fees above are prohibitive. I can't see paying $150 a year to keep the TSP Mutual Fund Window open. $28.75 is a lot for transactions as well. I think that you'll be much better off with sticking with the TSP basic funds and using other accounts to gain access to other asset classes.

Military Finances are Different

TSP is a lot like a 401(k). But it isn't the exact same thing. That isn't the only place where an Active or Retired Senior Military Officer or NCO's finances are different than their civilian counterpart. That's why we think you should work with a financial planner or advisor that works with active and retired military members like you each and every day. If you'd like to find out how we work with Active and Retired Senior Military Officers and NCOs, use the button below to schedule a free initial consultation. 

If you found this article useful, you might like the following blog posts:

One Reason to Consider Moving Your Assets Out of TSP - Estate Planning


I'm About to Retire From the Military. What Should I Do With My TSP?


Roth TSP in a Combat Zone: Almost a "No Brainer"


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