Too-Frequent Traders?

Twenty years ago, Congress designed the TSP, a 401(k)-type plan, on the theory that employees would buy and hold stocks and bonds for the long term as a supplement to their pensions. But the Internet allows employees to more easily track stock markets, swap advice on Web sites and file a buy or sell order from a TSP fund each morning of the workweek.

Several union representatives on the council said they had not heard any complaints about the proposed limits from their members, but Catherine A. Ball of the National Treasury Employees Union said employees at the Internal Revenue Service, Securities and Exchange Commission and Federal Deposit Insurance Corp. had voiced concerns about trading limits.

Ball and others suggested that frequent traders might be willing to pay fees on additional transactions, but Long said the staff had opted against fees as too cumbersome to administer.

Ray noted that a 2 percent fee, used by some mutual funds, would have cost the 323 employees who were active traders in October a minimum of $5,000. She also noted that it is common among mutual funds to limit the number of stock trades by investors.

After a lengthy discussion, Sauber said he wanted to take the matter back to his union leaders for more study, and suggested that the council could weigh in with a recommendation next year, before the TSP moves ahead with publishing a proposal rule to impose trading limits.

The advisory council did not object to a TSP request to send letters to frequent traders, asking them to stop or to only make fund transfers through the mail, rather than the Internet.

"This is a retirement fund, not a day-trading account," said Richard N. Brown, president of the National Federation of Federal Employees.

Stephen Barr's e-mail address isbarrs@washpost.com.