TSP expenses (i.e., the cost of administering the program) include management fees for each investment fund, the costs of operating and maintaining the TSP’s record keeping system, providing participant services, and the printing and mailing of notices, statements, and publications.
These expenses are paid from the forfeitures of Agency Automatic (1%) Contributions of certain Federal employees who leave Federal service before they are vested, other forfeitures, loan fees, and — because those forfeitures are not sufficient to cover all of the TSP’s expenses — earnings on participants’ accounts.
The effect of administrative expenses (after forfeitures) on earnings of the G, F, C, S, and I Funds is expressed as the expense ratio of each fund. The expense ratio for a fund is comprised of the total administrative expenses charged to that fund during a specific period, divided by that fund’s average balance for that period.
Since the L Funds do not have any unique administrative expenses, they do not have any additional charges. Therefore, the L Fund administrative expense ratios are weighted averages of the expense rations of the G, F, C, S, and I Funds.
Your share of TSP net administrative expenses is based on the size of your account balance. For example, the G Fund’s expense ratio for 2009 was .028%. Therefore, if you invested in the G Fund in 2009, earnings were reduced by 28 cents per $1,000 of your G Fund balance.
The chart below illustrates the TSP expense ratios since 1999.