The secrets of well-endowed feds

When they move into government after lucrative private-sector careers, many if not most of the financially well-endowed new feds roll their outside retirement nest-egg accounts into the Thrift Savings Plan.

The TSP is the government’s equivalent of a 401k plan. It has 4 million plus investors ranging from U.S. senators, generals and admirals to the lowest paid feds and lowest rank soldier, sailor or airman. Retirees can also remain in the TSP, as can people who leave federal service. Many do just that.

Most high-earners who come into government — often in top legal or medical jobs, or as federal judges or political appointees — who move their retirement accounts into the TSP cite its low administrative fees (the lowest in the business), and the unique G Fund investment option. It is made up of special U.S. Treasury securities that are about as safe as they get. Plan B: A jar full of gold coins buried in the backyard and guarded by faithful cousin Zeke.

John Bogle, founder of Vanguard and the index funds, says most funds charge too much. He’s said the TSP is the best. Other successful financial types, and market-watchers, agree. Many financial writers have said they wish they could get into the TSP. It has repeatedly been voted the best 401k plan in the world. Period! And yet…


Yet the TSP has its critics. Some don’t like its limits on the number of trades. They insist they are not market-timers or day-traders. But they would like to be able to move funds quickly if they sense a big rise or fall coming in the market.

Some want the TSP to let them invest part of their current and future contributions into funds outside of the TSP.

Others — some of them individuals, some of them financial groups and lobbyists — want the TSP to broaden its investment options. In the past, they have lobbied for funds limited to special geographic regions, for gold or precious metals funds, for funds invested exclusively in minority-businesses or socially or environmentally correct companies. For years — but for obvious reasons not lately — there was a strong push for a REIT (real estate investment trust). Now, not so much.

Today at 10 a.m., EST, Tom Trabucco, spokesman for the TSP will be the guest on our Your Turn radio show. He’ll talk about how the TSP, and separate funds are doing, and any plans for changes or expansion. At 10:30 a.m., CBS Moneywatch’s Allan Roth will talk investing in general and the TSP in particular. Listen if you can online or in the D.C. area on 1500 AM. If you want to call in during air time, the number is (202) 465-3080. Or you can e-mail questions/comments to me at:


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