Talk about unwanted attention from Washington. Fidelity and TIAA-CREF have attracted the ire of U.S. Sen. Herb Kohl D., Wis., chairman of the Senate's Special Committee on Aging. Kohl called certain print IRA rollover ads the companies have run "misleading" advertisements to entice government employees to roll over their money to them.
According The Wall Street Journal, 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, stood its ground and decided not to change its ad. The Journal reports the company defended its pitch as potentially beneficial to investors.
TIAA-CREF's ran the following: "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."
The paper says 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.
Boston-based Fidelity's ad, directed at federal employees in Washington, refers to converting "your old TSP" to a Fidelity IRA.