Recently the non-partisan (cough, cough) GAO conducted a study investigating large (> $5 Million) IRA balances.
According to WSJ, this study was prompted by the disclosures of Mitt Romney and Silicon Valley entrepreneur Max Levchin that they each have IRA balances worth tens on millions.
The GAO concluded in its preliminary study (GAO-14-878T):
In 2014, the federal government will forgo (emphasis mine) an estimated $17.5 billion in tax revenue from IRAs.
GAO will release a separate report with its final results on individual retirement accounts later this fall.
What prompted this study? Congress is reportedly upset about the super-sized IRA balances because (according to GAO) :
Congress limited annual contributions to IRAs to prevent the tax-favored accumulation of unduly large balances, but concerns have been raised that tax benefits accrue primarily for higher -income individuals.
Back to the cases of Mitt and Max… Continue reading
John Hechinger and John Turner recently published an article picked up by Bloomberg and Businessweek alerting TSP and TSP participants to the well-known TSP ‘IRA Rollover Scandal’.
In the TSP Rollover Scandal, brokerage houses recommend any retired or separated TSP participant take their TSP balance and roll it over to their Brokerage House IRA. In most cases, this benefits the Brokerage House much more than it does the former TSP Account Holder, as the Brokerage house can collect lucrative fees by managing the participant’s retirement balance in-house. The article was well researched and rightfully took some jabs at ‘GoldBug’ IRA Brokerage Houses, but I think the author went a bit far by bashing NFCU and USAA. USAA and NFCU are Friend- Not Foe- of the Veteran’s wallet.
In defense of NFCU, USAA, Schwab, Fidelity, and Vanguard, I present the following…
5 Reasons Why Thrift Savings Plan Sucks Continue reading
While congress was hemming and hawing this past week about forcing TSP Investors to defer salary in to ‘Age Appropriate’ TSP Lifecycle funds (in lieu of the G Fund) as their automatic investment, a piece of key TSP news slipped past the radar of the Beltway Bloggers…
Recently the TSP publicized a study sanctioned by its Board of Directors to investigate the feasibility of a ‘Mutual Fund Window’ option within the TSP. This would let participants buy and sell 3rd party mutual funds in a ‘Mutual Fund Supermarket’ from agencies such as Fidelity, Schwab, Vanguard, etc.
Why? Roughly one third of TSP participants- Yours truly included- Have become a ‘very vocal minority’ and are clamoring for a few more flavors of TSP ice cream beyond Vanilla.
Last week a Senator proposed ‘TSP For Everyone’ legislation.
Here we go again. Every few years someone in Congress gets the bright idea that every man, woman, and child should have the same FEHB/TSP/Three Letter Acronym that Congress and Federal Employees have.
Let’s review why this is a Bad Idea. Continue reading