TSP Mutual Fund Window 2026: Is It Worth the $132/Year?

Last Updated: February 14, 2026 Reading Time: 9 min

The TSP Mutual Fund Window gives you access to roughly 5,000 mutual funds beyond the 5 core TSP funds. It launched in June 2022. Three and a half years later, only 0.08% of TSP participants use it.

That number tells you something. But it doesn't tell you whether the MFW makes sense for your situation. Here's how to decide.

Key Takeaways

• The TSP Mutual Fund Window costs $132/year in platform fees plus $28.75 per trade, on top of each fund's own expense ratio
• At a $40,000 balance, fee drag is 1.9%. At $400,000, it drops to 0.19%. Account size determines whether it's worth it.
• Only 5,500 out of 7.1 million TSP participants use the MFW (0.08%)
• For most federal employees, core TSP funds at 0.049% expense ratio remain the better choice
• MFW balances must be moved back to core funds before doing the new 2026 Roth in-plan conversions

What Is the TSP Mutual Fund Window?

The MFW lets you invest up to 25% of your TSP balance in mutual funds from Vanguard, Fidelity, T. Rowe Price, and about 300 other fund families. That gives you access to asset classes that core TSP funds don't cover: emerging markets, REITs, commodities, sector-specific funds, and ESG options.

Think of it as an expansion pack for TSP. You keep your core TSP account and can allocate a portion to outside mutual funds while staying inside TSP's tax-advantaged wrapper.

What you can't do: buy ETFs, individual stocks, or bonds through the MFW. Mutual funds only.

Requirements to Open

Requirement	Details
Minimum TSP balance	$40,000
Minimum initial transfer	$10,000
Maximum allocation	25% of total TSP balance
Where to open	TSP.gov (My Account, then Mutual Fund Window)

If your balance dips below $40,000, you can keep your existing MFW investments but can't add new ones.

The Fee Breakdown

This is where most people stop reading and close the tab:

Fee	Amount	Frequency
Administrative fee	$37	Annual
Maintenance fee	$95	Annual
Per-trade fee	$28.75	Each buy AND each sell
Total platform cost	$132/year + trades

The $37 administrative fee was recently reduced from $55 after a three-year recalculation. It will be recalculated again in 2025.

For comparison, core TSP funds charge an expense ratio of approximately 0.049%. That's $4.90 per year on a $10,000 balance. The MFW charges $132 before you make a single trade.

Fee Impact by Account Size

This table shows the real cost of the MFW relative to what you have invested. Assumes 2 trades per year (one buy, one rebalance).

TSP Balance	MFW Allocation (25%)	Annual Fees + 2 Trades	Fee Drag on MFW
$40,000	$10,000	$189.50	1.90%
$100,000	$25,000	$189.50	0.76%
$200,000	$50,000	$189.50	0.38%
$400,000	$100,000	$189.50	0.19%
$800,000	$200,000	$189.50	0.09%

These figures exclude the expense ratios of the mutual funds themselves, which typically range from 0.03% for index funds to 1.0% or more for actively managed funds.

The takeaway: At $40,000, your MFW picks need to outperform core TSP funds by roughly 2% per year just to break even on fees. At $400,000, the hurdle drops to about 0.20%, which is more reasonable.

Use our TSP Calculator to model how different contribution strategies and fund allocations affect your balance at retirement.

What Funds Are Available?

Approximately 5,000 mutual funds from about 300 fund families. The major names are there:

• Vanguard (index funds, target-date)
• Fidelity (actively managed, index, sector)
• T. Rowe Price (growth, balanced)
• American Funds (income, growth)
• PIMCO (bonds, income)

Asset Classes You Can Access Through MFW (But Not Core TSP)

Asset Class	Why You'd Want It	Core TSP Alternative
Emerging markets	Higher growth potential	I Fund covers developed markets only
REITs	Real estate exposure, income	None
Commodities	Inflation hedge, diversification	None
ESG / socially responsible	Values-based investing	None
TIPS	Inflation protection	G Fund is different (not inflation-linked)
Sector funds	Technology, healthcare, utilities	C Fund and S Fund are broad market
China/Hong Kong	Specific country exposure	Excluded from I Fund index

The I Fund's benchmark (MSCI ACWI ex-US IMI) excludes China and Hong Kong due to geopolitical concerns. The MFW is the only way to get that exposure within TSP.

How to Open and Use the MFW

1. Verify your balance is $40,000 or more
2. Log in to TSP.gov, go to My Account, then Mutual Fund Window
3. Transfer at least $10,000 from core TSP funds to MFW
4. Pay opening fees: $132 is withdrawn proportionally from your core TSP funds
5. Browse and select funds, review prospectuses
6. Execute trades at $28.75 each
7. Monitor the 25% cap. If market gains push your MFW above 25%, you can't add more until it drops back

Restrictions to Know

• You can't contribute directly to MFW. Money goes to core TSP first, then you transfer it over.
• You can't withdraw or take distributions from MFW directly. Sell your holdings, transfer the cash back to core funds, then withdraw.
• You can't do Roth in-plan conversions from MFW. Same deal: sell, transfer back, then convert.
• MFW transfers count against your 2-per-month interfund transfer limit. Go over 2 in a month and you can only move money to the G Fund.
• TSP loans can't come from MFW. Loans are only available from core funds.

Should You Use the MFW? A Decision Framework

Yes, consider it if:

You have a TSP balance of $200,000 or more. At that level, the fee drag falls below 0.40%, which is reasonable if you have a specific investment thesis.

You want asset classes that core TSP doesn't cover. If you specifically need emerging market, REIT, commodity, or ESG exposure and want to keep it inside TSP's tax-advantaged wrapper, MFW is your only option within TSP.

You know how to pick funds. There is no fiduciary vetting of MFW funds. Nobody is screening these for you. If you're comfortable analyzing expense ratios, Sharpe ratios, and sector allocation on your own, MFW gives you the tools. If not, you're guessing with a $28.75 price tag on every guess.

You want China or Hong Kong exposure. The I Fund's index excludes these markets entirely. MFW is the only way to invest in China within TSP.

No, skip it if:

Your balance is under $100,000. The 0.76%+ annual fee drag will likely erase any benefit from broader diversification. At $40,000, you're paying nearly 2% just for the privilege of access.

You're a passive index investor. Core TSP funds already give you broad U.S. and international market exposure at 0.049%. Buying a Vanguard 500 Index fund through MFW when the C Fund tracks the same index is paying extra for the same thing.

You trade frequently. At $28.75 per trade, rebalancing quarterly costs $230 per year in trade fees alone, before you even count fund expense ratios.

You plan to do Roth conversions soon. The requirement to sell MFW positions and transfer back before converting adds friction and potential tax timing issues.

You'd rather just open an IRA. A separate IRA at Fidelity, Vanguard, or Schwab gives you access to ETFs, individual stocks, and bonds with zero commissions and no platform fees. The only reason MFW wins over an IRA is consolidation: everything stays inside one TSP account.

MFW vs. Opening a Separate IRA

For most federal employees who want more diversification, a separate IRA is the better path.

Factor	TSP Mutual Fund Window	Separate IRA (Fidelity/Vanguard/Schwab)
Annual platform fee	$132	$0
Trade fees	$28.75 each	$0
Investment options	~5,000 mutual funds	ETFs, stocks, bonds, mutual funds
Tax advantage	Inside TSP wrapper	Traditional or Roth IRA
Contribution limits	N/A (transfers only)	$7,000/year ($8,000 if 50+)
Withdrawal flexibility	Must transfer back first	Direct
Roth conversions	Must transfer back first	Direct

The MFW's advantage is keeping your retirement assets consolidated in one account. For some investors, that simplicity is worth the extra cost. For most, the IRA is the better tool.

2026 Update: Roth Conversion Restriction

On January 28, 2026, TSP launched Roth in-plan conversions, letting you convert traditional TSP balances to Roth without rolling over to an IRA.

But MFW balances can't be converted directly. You must:

1. Sell your MFW mutual fund positions
2. Transfer the cash back to core TSP funds
3. Then request the Roth conversion

This creates two problems. First, you'll pay $28.75 per sell trade. Second, the sell-transfer-convert sequence takes time, meaning you can't precisely control the tax impact of the conversion.

If Roth conversions are part of your retirement strategy, keep this friction in mind before allocating heavily to the MFW.

Common mistakes

1. Buying a Vanguard 500 Index fund through MFW when the C Fund already tracks the S&P 500. You're paying $132/year plus trade fees for exposure you already have for free.

2. Underestimating total cost. Platform fees ($132) plus trade fees plus each mutual fund's own expense ratio can easily exceed 2% annually on a minimum-balance account. Most people only think about the $132.

3. Putting just $10,000 in MFW. The math doesn't work at that level. Nearly 2% fee drag means your funds need to massively outperform core TSP just to break even.

4. Forgetting that MFW transfers count toward the 2-per-month interfund transfer cap. Go over and your only option is the G Fund.

5. Picking funds based on last year's returns. Past performance says almost nothing about what a fund will do next year, and you're paying $28.75 every time you change your mind.

Run the numbers on your TSP

Use the TSP Calculator to project your balance at retirement and compare withdrawal strategies. Plug in your contribution amount and expected return to see where you'll land, whether you stick with core funds or add MFW to the mix.

Project Your TSP Balance →

Frequently Asked Questions

How much does the TSP Mutual Fund Window cost?

You pay $132/year in platform fees ($37 administrative plus $95 maintenance), plus $28.75 for every trade. Each buy and each sell counts as a separate trade. These fees are on top of each mutual fund's own expense ratio. For a $40,000 account with 2 trades per year, total fees reach about $190, or 1.9% of your MFW allocation annually. Compare that to the 0.049% expense ratio for core TSP funds.

Is the TSP Mutual Fund Window worth it?

For most federal employees, no. The core TSP funds provide broad market diversification at an expense ratio of just 0.049%, among the lowest anywhere. The MFW becomes more cost-effective at higher balances. At $200,000 or more, the fee drag drops below 0.40%. It may be worth considering if you specifically need asset classes unavailable in core TSP, like emerging markets, REITs, or ESG funds.

What mutual funds are available through the TSP Mutual Fund Window?

Approximately 5,000 mutual funds from about 300 fund families are available, including Vanguard, Fidelity, and T. Rowe Price. You can access emerging markets, REITs, commodities, sector funds, and ESG options. However, ETFs, individual stocks, and individual bonds are not available. The full list is maintained at TSP.gov.

How many federal employees use the Mutual Fund Window?

Very few. As of July 2024, approximately 5,500 out of 7.1 million TSP participants (0.08%) had invested through the MFW, with roughly $400 million invested out of $927 billion in total TSP assets. This is far below the 1-3% adoption rate FRTIB originally projected.

Can I do a Roth in-plan conversion on my MFW investments?

Not directly. As of January 28, 2026, TSP offers Roth in-plan conversions, but MFW balances must first be transferred back to core TSP funds before they can be converted. This means selling your mutual fund positions, transferring the cash back, then requesting the Roth conversion. This can create tax timing complications if markets move during the process.

Related Resources

• TSP Calculator: Project your TSP balance and compare withdrawal strategies
• TSP Guide 2026: Complete guide to contribution limits, funds, and Roth options
• TSP Roth In-Plan Conversion Guide: New 2026 conversion rules and MFW interaction
• TSP G Fund Analysis 2026: Core fund comparison and allocation strategy
• TSP Annuity Options Explained: MetLife annuity vs lump sum withdrawals
• TSP I Fund Allocation Strategy: International exposure through core funds
• TSP Millionaire Strategy 2026: How TSP millionaires build their balances (none use the MFW)

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Sources: TSP.gov Mutual Fund Window, TSP Fact Sheet TSPFS28, 5 CFR Part 1601 Subpart F, TSP Bulletin 25-4