In a letter released Tuesday by Sen. Kohl, New York-based TIAA-CREF agreed to pull a print ad directed at participants in the Thrift Savings Plan, a $225.7 billion 401(k)-style retirement fund for federal employees and the military. Fidelity, however, decided not to change its ad and defended its pitch as potentially beneficial to investors.
TIAA-CREF's print ad, which ran in the Washington area, said: "Do you know when your TSP retires? Your TSP won't last forever...make sure your assets continue to work for you throughout your retirement. So roll over your TSP to a TIAA-CREF IRA."
Officials with the Thrift Savings Plan, who complained to Sen. Kohl in a recent hearing, say the trouble with the ad is that people who leave federal service are under no obligation to take their assets out of TSP when they retire; rather, they are encouraged to leave their funds in the plan because of its low fees, which are around 15 cents per $1,000 in an account. The plan contains index funds managed by Barclays PLC's Barclays Global Investors unit.
Thursday, July 31, 2008
Senator Kohl Criticizes IRA Rollover Ads
The Wall Street Journal [subscription required] reported yesterday that Senator Herb Kohl ((D., Wis.), chairman of the Senate's Special Committee on Aging, says investment vendors TIAA-CREF and Fidelity Investments and have run "misleading" advertisements to entice government employees to roll over their money to them.
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