The TSP is a huge plan with $216 billion in assets. Why are transaction costs of $16.5 million a problem?
As indicated in Question 10, transaction costs affect the returns of the funds. For example, the I Fund’s transaction costs in 2007 decreased the I Fund’s return by 6 basis points or .06%. The cost of administering the TSP program was only 1.5 basis points (.015%) in 2007. The Board is charged with keeping TSP expenses low for all participants. See 5 U.S.C. 8475. We have determined that IFT limits will result in a significant expense reduction for TSP participants.
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