TSP Administrative Expenses

Rates of return for the funds in the TSP reflect the deduction of accrued TSP administrative expenses. This means you pay a small fee to cover the administrative costs of the Thift Savings Plan. Major expenses of the TSP include the operating and development costs of the record keeper's computer system, the operations of the TSP Service Office, and the printing and mailing of publications and participant statements.

Two sources of funds are used to cover the expenses of the TSP. The first source is forfeitures of any nonvested Agency Automatic (1%) Contributions. FERS employees who leave Federal service before they are vested in the TSP forfeit the Agency Automatic (1%) Contributions and earnings on those contributions.

The second source of funds is earnings on participants' accounts. Because forfeitures are not sufficient to pay all expenses, a portion of earnings is used to pay the balance of accrued administrative expenses. Accrued administrative expenses, after forfeitures, are deducted from the earnings of the G, F, C, S, and I Funds in proportion to the size of those funds. Investment management fees of the F, C, S, and I Funds are borne exclusively by the participants investing in those funds. Information on TSP expenses is provided in the annual audited financial statements of the TSP, which are posted on the TSP Web site each May.

The effect of accrued administrative expenses (after forfeitures) on the rates of return of the five funds is measured by the expense ratio of each investment fund. The expense ratio for a fund is the total of accrued administrative expenses charged to that fund during the period divided by that fund's average balance for that period.

Your share of TSP net accrued administrative expenses is based on the size of your account balance. For example, the G Fund expense ratio was .05 percent in 2000. This means that in 2000 your earnings in the G Fund were reduced approximately $0.50 for every $1,000 of your G Fund account balance. The expense ratios for the G, F, and C Funds since 1988 are as follows: