The federal government inadvertently could cause a massive selloff of the Standard & Poor's 500 index later this year.
That's the conclusion of Ric Edelman, a Fairfax, Va.-based financial planner.
Starting in October, the federal government plans to let participants in the Thrift Savings Plan, the 401(k) look-alike for federal government workers, diversify their retirement savings into domestic small-cap stocks and international equities.
Currently, the only exposure federal government workers have to equities is through an S&P 500 index fund.
But with $62.9 billion, or 64% of the Thrift Savings Plan's $98.2 billion, invested in the index fund, there could be a huge outflow if all of the plan participants simultaneously decide to move their money into the two new funds, Mr. Edelman said.
But that scenario is unlikely, Mr. Edelman noted: "It's likely that many federal workers will not shift, or they will shift only a portion of their accounts."