Q: Mandatory 100% move to G on third IFT?

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Q: Mandatory 100% move to G on third IFT?

Post by Aitrus »

I received a question via PM from a newish member who wanted to ask it in the forum, but couldn't figure out how to start a new thread. I'm posting his question here, as well as my answer.

The member's question is as follows:
My Question is :
I have seen that one can transfer unlimited portions to G fund in increasing amounts after 2 IFTs that month. Example: 100%C; then 80 %C, 20%C, 75%C 25%G; 70%C 30%G.... I have a small portion in I fund that I was thinking of transfering to G; yet I dont want to take any away from the portiong in C Fund. I called TSP this morning and the lady stated I could only move 100% to G on my 3rd move. I was just wondering if this is a move that the computer just cant stop-the decreasing amounts to G.
The person on the phone isn't entirely correct. While your third IFT of any month can only be towards the G Fund, it doesn't have to be 100% of your money on hand. So your example of 100% C, then 80/20 C/G, then 75/25 C/G and so forth makes sense and is entirely possible.

If you have some in the I Fund and have used up both IFTs for a month, such as 60 C / 20 I / 20 G, and want to pull money from just I and leave C alone, that's possible as well. When you make your IFT you can just change the numbers to read 60 C / 40 G. When you go to the IFT screen on tsp.gov, you have the option of dividing your 100% up however you wish. The only stipulation is that after the 2nd IFT, the % amount in G has to go up while the others either stay the same or go down.

There's one small caveat to this: the "less than 1%" rule. This rule means that you're allowed to "rebalance" your account anytime you wish - even after you've used both of your IFTs for the month. In this way you can actually remove money from the G Fund and place it in another Fund even after your second IFT.

It works like this: since you never have full percentages in any Fund, you're allowed to rebalance up or down to a full %. So if you have 60.25% C / 39.75% G, you can make an IFT to rebalance to 61% C / 39% G - essentially taking a bit of money out of G and putting it into C even after your second IFT is complete. You can do this daily, but it's a bit hard to do since you don't know exactly what your end-of-day balance will be due to having to submit your IFT by noon EST, but it takes effect after close of business.

Some people have done this in the past as a way to keep some money safe in G when the market looks sketchy, but can pull a bit back into the market in case their guess was wrong and the market went up instead of down. It's gaming the system a bit using a small loophole. Just be sure to use it only after you've used up both IFTs - a "less than 1%" IFT will count against your first two IFTs for a month if you haven't used them yet for a given month.

I played around with this idea for a short while, and my conclusion is that while it's a neat little rule, it's more trouble than it's worth. I have better things to do with my time than mess around with less than 1% of my money every day as I try to eke out a slightly bit better return. Juice just isn't worth the squeeze for me. Other people's experience may differ.

Hope that helps!
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Re: Q: Mandatory 100% move to G on third IFT?

Post by 23V23C »

I like how you've broken it down. I've played with trickling my funds back to the G Fund and just didn't have the time to manage it that way. To also help the newish member, I found the following statement on the TSP.gov site. Seems like the TSP Customer Service rep should have been able to look it up, too. Unlimited IFTs each month, but any after the first two IFTs must go to the G Fund:

"Currently, participants may make unlimited IFTs during each month...However, for each calendar month, the first two IFTs can redistribute money in a participant’s account among any or all of the TSP funds. After that, for the remainder of the month, IFTs can only move money into the Government - 2 -Securities Investment (G) Fund (which will increase the percentage of the account held in the G Fund by reducing the percentage held in one or more of the other TSP funds)."

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Re: Q: Mandatory 100% move to G on third IFT?

Post by misfit »

Figured I’d share this.

Please correct the following error(s):
Because you have already executed two interfund transfers this month, you are eligible to transfer your money from the F, C, S, I and L Funds only to the G Fund. You cannot transfer among the other funds until after noon eastern time on the last business day of this month. Click here for more information. If you would like to make an IFT request into the G Fund, please re-enter your request.

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Re: Q: Mandatory 100% move to G on third IFT?

Post by ProduceMan »

Aitrus is correct.

For the members that did a 3rd IFT out of G into a non G and ended with a 3rd IFT
(just the opposite), non G into G. Your account percentage at market close may have worked against your request,

For example, Account % at IFT request S 1.95%. G. 98.05
Your IFT request. S. 2.0%. G. 98.0

Before IFT (after close). S 2.05. G 97.95
After IFT. S. 2.0. G. 98.0
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Fund Prices2021-07-29

G $16.63 0.00% 0.77%
F $21.09 -0.15% -0.51%
C $66.32 0.43% 18.61%
S $85.20 0.43% 14.82%
I $39.19 0.69% 10.75%
L2065 $14.30 0.52% 15.19%
L2060 $14.30 0.52% 15.19%
L2055 $14.30 0.52% 15.19%
L2050 $29.03 0.42% 12.50%
L2045 $13.24 0.39% 11.76%
L2040 $48.29 0.36% 11.04%
L2035 $12.75 0.33% 10.18%
L2030 $42.40 0.31% 9.34%
L2025 $11.99 0.23% 7.40%
Linc $23.15 0.11% 3.92%

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