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How important is ERISA protection?

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  • How important is ERISA protection?

    Thrift Savings Plan (TSP) isn't ERISA protected.  I have accounts at Fidelity and other brokerages that are ERISA protected. How important is ERISA protection?  I'd like to consolidate all my accounts at TSP, but don't know whether to do so because TSP isn't ERISA protected.  Thank you!

  • #2
    I would not worry about the creditors of the us govt.
    This should not be a factor in your decision.
    Never fully close your tsp either.


    • #3
      it’s not about creditors of the US gov

      it’s about asset protection against a potential creditor of the OP and whether assets moved into the TSP would be less protected than in their present location

      That said I don’t know the answer to the OPs question other than to say asset protection doesn’t matter, until it does


      • #4
        Duly noted.


        • #5

          Thrift Savings Plan (TSP) isn’t ERISA protected
          Click to expand...

          Your brokerage accounts are NOT under ERISA, unless they are part of a group retirement plan.  Individual 401k plans fall under state law, so it can be worse than ERISA protection, though in some states the laws are better than in other states.  IRAs are also under state law (limited protection, usually around $1M, but need to read the fine print), and you might have an FDIC insured account such as money market savings (also not ERISA).

          It is true that TSP was established under Federal Employees' Retirement Security Act of 1986, not ERISA, and there. I found this document that actually explains some of the legal procedures as they relate to the TSP plan:

          Definitely worth a read for anyone with this type of plan.
          Kon Litovsky, Principal, Litovsky Asset Management | [email protected] | 401k and Cash Balance plans for solo and group practices, fixed/flat fee, no AUM fees