If you work for the State of Washington and you’re in Plan 3 (whether that’s TRS 3, PERS 3, or SERS 3), there’s a good chance a big chunk of your retirement money is sitting in something called the WSIB TAP Fund. Most people never chose it on purpose. It’s the default option, and unless you actively moved your money somewhere else, that’s probably where it still is today.
In this post, we’ll walk through what the WSIB TAP Fund actually is, the two big reasons you may want to move your money out of it, and the couple of situations where staying put still makes sense. We’ll keep the math simple and use real numbers so you can see exactly what’s going on with your account.
What Is the WSIB TAP Fund, Anyway?
WSIB stands for the Washington State Investment Board. Instead of just handing your Plan 3 money over to a well-known investment company like Vanguard or BlackRock, the state built its own fund and manages it in-house. That fund is called the TAP Fund, and it’s the automatic, default home for the “investment account” part of your Plan 3 balance.
Here’s the part that surprises a lot of people: this default status has been in place since before 2011. So if you started working for the state before then and never logged in to change anything, there’s a strong chance your money has been sitting in the TAP Fund this whole time. In fact, roughly 60 to 65 percent of all Plan 3 investment dollars are still parked there today.
That’s not automatically a bad thing. But it does mean most people have never really looked under the hood to see what they actually own. Let’s do that now.
What’s Actually Inside the TAP Fund?
The TAP Fund isn’t a simple mix of stocks and bonds like a lot of target-date funds you might see elsewhere. It’s built from several different pieces, and some of them are a lot riskier than most people realize. Here’s roughly how it breaks down.
| Asset Type | Approximate Share | What It Means |
|---|---|---|
| Private Equity | ~25% | Ownership stakes in companies that aren’t publicly traded. You can’t just look up the price on Google, and only large institutional investors can normally buy in on their own. |
| Public Equity | ~33% | Regular publicly traded stocks, including large, mid, and small companies anyone can buy. |
| Real Estate | ~18% | Commercial and residential property investments, which rise and fall with the real estate market. |
| Tangible Assets | Smaller share | Things like farmland and other physical assets. |
| Fixed Income (Bonds) | Remaining share | The more conservative, lower-risk portion of the fund. |
Add it up, and around 55 percent of the TAP Fund sits on the higher-risk end of the spectrum, with another chunk sitting right in the middle, and only about a quarter of the fund considered lower risk. In plain terms: this is an aggressive fund, built more like something a 30-year-old would choose, not something most people would pick for the years right before or after they retire.
Reason 1: Risk Gets Dangerous the Closer You Get to Retirement
If you’re in your 30s, an aggressive fund like this usually isn’t something to lose sleep over. You have decades ahead of you, and markets that fall today typically have plenty of time to recover before you ever touch that money.
But the closer you get to retirement, the more that risk starts to matter. Financial planners often talk about a “retirement danger zone,” and it’s a simple idea once you see it laid out.
The Retirement Danger Zone
Picture a 10-year window that starts about 10 years before you retire and continues into your first 10 years of retirement. If a bad market downturn hits during that window and drags on for a couple of years, it can do real, lasting damage to your account. That’s very different from a downturn that happens when you’re 35.
Here’s why: when you’re young, you’re still adding new money to your account every paycheck, and you have years for the market to bounce back. But once you’re pulling money out for living expenses, a downturn does double damage. Your account is dropping in value at the same time you’re withdrawing from it, which leaves less money left over to ever recover. That one-two punch is why timing matters so much, and it’s why an aggressive, higher-risk fund tends to make less and less sense the closer you get to that danger zone.
This is exactly the kind of thing worth reviewing with someone who knows the ins and outs of your specific pension system. If you’d like a second set of eyes on where your money currently sits, you can always schedule a personal meeting to walk through your account together.
You Do Have Options
The good news is Plan 3 gives you a choice. Instead of leaving your investment account in the WSIB TAP Fund, you can move it to what’s called the “self-directed” side of your account. Don’t let the name scare you. It doesn’t mean you’re on your own with no guidance. It means you get to choose your own investments instead of accepting the state’s default fund.
On the self-directed side, you can pick target-date funds that automatically adjust as you get older, or you can build your own mix of large-cap, mid-cap, and other fund options. Either way, you’re able to dial your risk level up or down to match where you actually are in life, which the TAP Fund’s one-size-fits-all setup can’t do for you.
Reason 2: Your Money Isn’t Easy to Get To
The second reason has nothing to do with risk. It’s about access. Money sitting in the WSIB TAP Fund is what’s called illiquid, meaning it isn’t quick or easy to withdraw when you actually need it.
Here’s why: the TAP Fund only processes, or “liquidates,” transactions at the end of each month. Then it holds onto that money for another full month after that before it actually sends your check, on the second business day of the following month. Depending on when in the month you make your request, that can add up to a 30 to 60 day wait just to get your own money.
Compare that to the self-directed side of your account, where a withdrawal request typically turns into a check in the mail within about a week. That’s a meaningful difference if you’re retired and counting on that money to cover regular expenses, or if an unexpected bill shows up and you need cash quickly.
| Account Type | Typical Wait for a Withdrawal |
|---|---|
| WSIB TAP Fund | 30 to 60 days |
| Self-Directed Account | About 1 week |
If you’re still working and years away from touching this money, a longer wait time might not bother you much. But once you’re retired and relying on withdrawals to pay your bills, that gap becomes a much bigger deal.
When Staying in the WSIB Fund Might Still Make Sense
To be fair, there are a couple of situations where leaving your money in the TAP Fund still makes sense, so let’s cover those too.
- You’re planning to annuitize through the TAP Annuity. Money has to pass through the WSIB TAP Fund on its way into the state’s TAP Annuity option. If that’s part of your plan, keeping money there for now is part of the process.
- You genuinely want the aggressive allocation. Some people like a more aggressive mix and are comfortable with the ups and downs that come with it. If that fits your age and your comfort with risk, there’s nothing wrong with staying put.
Worth noting, though: the self-directed side also offers aggressive fund options, including a large-cap index fund that tracks something similar to the S&P 500. Over long stretches of time, that fund has generally outperformed the TAP Fund. So even if you want to stay aggressive, self-directed can usually get you there too, often with more flexibility.
Frequently Asked Questions
Does this apply to me if I’m in TRS 3, PERS 3, or SERS 3?
Yes. The WSIB TAP Fund works the same way across all three Plan 3 systems: TRS 3 for teachers, PERS 3 for most public employees, and SERS 3 for school employees. The rules about defaults, risk, and access timelines are shared across all of them.
How do I know if my money is currently in the WSIB fund?
Log in to your DRS account online and look at how your investment account balance is allocated. If you never actively picked “self-directed” and made fund selections, there’s a good chance you’re still in the WSIB TAP Fund by default.
Is moving to self-directed hard to do?
It isn’t complicated, but it does take a few steps inside your DRS account, and you’ll need to decide which funds to choose once you’re there. Plenty of people prefer to walk through it with someone who does this regularly, just to make sure it’s set up correctly the first time.
Will moving my money cost me anything?
Moving between the WSIB fund and the self-directed side doesn’t come with a transfer fee from DRS. That said, whichever investments you choose on the self-directed side will have their own normal fund expenses, which is true no matter which fund family you invest in.
Should I make this decision on my own?
You certainly can, but it’s always a good idea to talk with a financial advisor first, ideally one who’s familiar with the details of Washington’s specific pension plans. The right answer depends on your age, your other savings, and how soon you plan to retire, so a quick conversation can go a long way toward making sure you’re choosing the setup that actually fits your situation.
The Bottom Line
The WSIB TAP Fund isn’t a bad fund, and it isn’t a trick. It’s simply a default, aggressive, hard-to-access fund that made sense for the state to build as a one-size-fits-all option. The trouble is that a one-size-fits-all option rarely fits anyone perfectly, especially as you move closer to retirement and start caring more about both risk and access to your own money.
Take a few minutes this week to log in to your DRS account and see exactly where your Plan 3 investment dollars are sitting today. If you’re still in the WSIB fund and you’re within 10 to 15 years of retirement, it’s at least worth a conversation about whether the self-directed side is a better fit for where you are right now.
P.S. If you’d like help thinking through your own Plan 3 allocation, or you just want a second opinion before making any changes, our free community is a great place to start. You’ll get access to courses and resources built specifically for Washington public employees navigating exactly this kind of decision.
