Consolidate investments in Vanguard, Fidelity etc. into one bucket — the TSP?

[Anonymous]

My elderly parent, a former federal employee, has more than 50 percent of her retirement savings in a TSP account. She has other IRA investments with Vanguard and, I think Fidelity. I have suggested consolidating all of them into her TSP, for simplicity’s sake and because I have heard the TSP has the lowest fees.

She is considering it but reflexively feels that it is “safer” to spread such investments around. She is in her 80s and mentally capable of keeping track of multiple accounts for now — but at that age things can change quickly.

Ultimately it’s her call, of course, but is there any reason not to consolidate her holdings into the TSP?

[Anonymous]

Here’s a bogleheads discussion of it.

https://www.bogleheads.org/forum/viewtopic.php?t=429262

I think basically you are right- it makes sense to do it for simplicity, especially since RMDs are calculated across all of her accounts.

[Anonymous]

Remember, your investments aren't IN those brokerage companies. They are acting as custodians/record keepers on her behalf. The underlying investments are held by her. In fact, they are probably in many of the same funds and underlying stocks across those multiple IRAs. So it's not truly safer, assuming her funds are already internally diversified.

I would absolutely consolidate/rollover everything into a single account, for ease of future administration. It honestly probably doesn't matter that much which one she chooses - TSP/Vanguard/Fidelity all have good, diversified very low cost fund options. The differences are pretty minimal from a financial perspective. Go with whichever she/you are most comfortable with using.

[Anonymous]

Anonymous wrote:Here’s a bogleheads discussion of it.

https://www.bogleheads.org/forum/viewtopic.php?t=429262

I think basically you are right- it makes sense to do it for simplicity, especially since RMDs are calculated across all of her accounts.

Thanks, PP. Actually this piece/thread offers a more mixed picture— good to have this info! Thanks.

[Anonymous]

Anonymous wrote:Remember, your investments aren't IN those brokerage companies. They are acting as custodians/record keepers on her behalf. The underlying investments are held by her. In fact, they are probably in many of the same funds and underlying stocks across those multiple IRAs. So it's not truly safer, assuming her funds are already internally diversified.

I would absolutely consolidate/rollover everything into a single account, for ease of future administration. It honestly probably doesn't matter that much which one she chooses - TSP/Vanguard/Fidelity all have good, diversified very low cost fund options. The differences are pretty minimal from a financial perspective. Go with whichever she/you are most comfortable with using.

It is safer if she has over $500k assets. In the event of a brokerage failure (usually fraud where your ownership wasn’t properly registered), you are insured only up to $500k by SIPC. Yes that doesn’t protect against market drops etc, but for specifically problems with the brokerage.

[Anonymous]

Post on bogleheads

[Anonymous]

Anonymous wrote:

Anonymous wrote:Remember, your investments aren't IN those brokerage companies. They are acting as custodians/record keepers on her behalf. The underlying investments are held by her. In fact, they are probably in many of the same funds and underlying stocks across those multiple IRAs. So it's not truly safer, assuming her funds are already internally diversified.

I would absolutely consolidate/rollover everything into a single account, for ease of future administration. It honestly probably doesn't matter that much which one she chooses - TSP/Vanguard/Fidelity all have good, diversified very low cost fund options. The differences are pretty minimal from a financial perspective. Go with whichever she/you are most comfortable with using.

It is safer if she has over $500k assets. In the event of a brokerage failure (usually fraud where your ownership wasn’t properly registered), you are insured only up to $500k by SIPC. Yes that doesn’t protect against market drops etc, but for specifically problems with the brokerage.

I mean, sure I guess that's true in theory, and definitely a good point if OP was using a small brokerage. But if TSP/Vanguard/Fidelity go down, that's end of days stuff financially. The solution for that is to be like the Nick Offerman character in The Last of Us, not spreading your investments around a few firms.

[Anonymous]

If the TSP goes down, we all have bigger things to worry about.

[Anonymous]

FWIW I find the TSP web interface and processes more annoying. Logins are more annoying, the rollover process took several tries before it went through, etc. Fidelity is 100x easier. Maybe you could compromise - keep TSP where it is and combine the other accounts into Fidelity or Vanguard. From what I hear on this board, TSP lost its edge in terms of "low fees" and Vanguard and Fidelity are pretty similar at this point.