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The Thrift Savings Plan (TSP) is a retirement savings plan offered to federal employees and military personnel. It is similar to a 401(k) plan, where employees can contribute a portion of their salary into a tax-advantaged retirement account.
But what happens to your TSP once you retire? After all, the whole point of the plan was to provide retirement income. Here are some options for what to do with your TSP once you retire, and why some of them might be better than others.
1. Leave your money in the TSP.
This is the default option, and it might seem like the easiest choice. You can leave your money in the TSP and continue to manage it just as you did while you were working. The advantage here is that the TSP has low fees and a variety of investment options. But this can also be a disadvantage. The TSP is designed for long-term investments, so you might not be happy with the restrictions on when and how you can withdraw your money.
2. Transfer your money to an IRA.
If you want more control over your retirement savings, you can transfer your TSP money into an individual retirement account (IRA). This will give you more flexibility in terms of investment options and when you can withdraw your money. Keep in mind that some IRAs may have higher fees than the TSP, so you’ll need to do your research.
3. Roll over your money into a new employer’s retirement plan.
If you’re planning to work for a new employer after you retire, you might be able to roll your TSP money into their retirement plan. This can simplify your retirement accounts and make it easier to manage your money. But keep in mind that not all employers offer this option, and you’ll need to be careful to avoid any penalties for early withdrawal.
4. Withdraw your money as a lump sum.
This is generally not a recommended option, but it’s worth mentioning. If you need a large amount of money all at once, you can withdraw your TSP money as a lump sum. However, this will have significant tax consequences and may not provide enough income to support you throughout your retirement.
In conclusion, there are several options for what to do with your TSP once you retire. Leaving it in the TSP may be the easiest choice, but transferring it to an IRA or rolling it over into a new employer’s plan can give you more control over your retirement savings. Whatever you decide, make sure to do your research and consult with a financial advisor to ensure you’re making the best decision for your financial situation.
Can I get back in TSP after getting out of it 15 years ago ?
Can you expound more on the Roth conversion please in a video from TSP? How does your firm work with Federal employees? Are you a fiduciary? How do you get paid? Do you specialize in dealing with Federal employees? What’s your strategy? Qualifications that make you able to work with Federal employees? References? Thanks
@Haws Federal Advisors what you failed to mention is if the Federal Government suffers Bankruptcy, which is highly likely that it will some time in the next 5 to 20 years. All Roth accounts can be taken by law, the Federal Government has that power! OUCH!!! The Dollar is on it's last legs, the World Bank (IMF) has already planned for the down fall of the U.S. Dollar as the world's Reserve Currency! When America Dollar loses it's Reserve Currency Status, America instantly goes from a 1st World Nation, to either a 2nd or 3rd World Nation Financially! Can you imagine the Stock Market crash on that day? It will make the Great Depression seem like a trip to Disneyland in comparison! Out of the 3 choices you listed none of them are any good! So my advice would be to get the money out of your TSP or out of the Roth before that day comes! As my Grandfather who went thru the Great Depression and fought in WW2 said, the only people with Money $$$$$$ after the bank run where the people who kept it under their mattress! If the IMF (World Bank) has already pre-planned for the Dollars Collapse, I wouldn't bet against them. Maybe something you young whipper snappers who are dealing out advice should take hold of??? The last group of young whipper snappers right back in the 1920s where saying this could never end! How wrong they where when the crash came! They where jumping out windows and committing suicide! If you look at the history of the world it takes a minimum of 25 to 50 years to come out of Depression (financial collapse like that). If it was not for WW2 they project it would have taken America to sometime in the 1970s to come out of the 1929 Depression! Do they teach any of this stuff in College or University or is it just number crunching? A world war or WW3 would probably include the use of Nuclear Weapons and it's projected that a war like that would kill at a minimum 1/3rd of the Earth's population, probable a lot more? WW2 is what caused the world to come out of it much quicker, only America had a industrial base that was not destroyed! That is what made America Great! America started shipping all it's Industrial base out in the late 1980s to 1990s. America has very little industrial base, only about 3% is left! Not enough to bring a nation back! LOL Paper shuffling is useless in a Depression, all those folks get fired! Reason: No papers to shuffle, economy is dead! Stock Market is bust! Derivatives at 300% inflation reset to zero! Derivatives is where 99% of the worlds wealth is (basically all on computer) nothing to back it! Derivatives is one massive ponzi scheme on something well beyond steroids! Remember a old codger like me, telling you it's coming, just wait for it! I don't predict dates, just going by what the IMF has said! IMF anticipates Dollar collapse before 2040 and more likely before 2035! These are the people that shape the worlds financial activities! The somebodies! I bet the rich will have their assets moved to safe haven well before the collapse comes! LOL
hI, I KNOW YOU SAID WITHDRAWS COME OUT PRO RATA BUT I JUST LOOKED AT THE TSP WITHDRAW OPTIONS AND IT DOES GIVE YOU THE CHOICE IF I COULD ATTATCH A PIC I WOULD.
Let's see right now TSP 60% C and 40% G, $500,000 Fidelity (managed) $40,00 in ex employer 403b….am I set up for retirement @65… currently 62….oh yeah carrying way to much Credit Card debt (30,000)
basically remove all your Roth TSP/rollover it to a Roth IRA and any deferred TSP money move to a traditional IRA you don't want dinged by the 'pro-rata' rule–and then stash the remainder in the G or F fund which historically has made 3-6%/year with no downside risk. you can also always transfer money INTO the TSP, so you can replenish that G/F fund 'bucket #1 (basically cash) easily with your other variable investment buckets.
The annuity is the best choice for someone who might not be in the best position to have full control over their financial choices: people suffering from cognitive issues (permanently, dementia, injury, etc), or someone who may be suffering from financial abuse–spousal abuse, eldercare abuse, romance scams, etc. The annuity would prevent an outside actor from stealing all of the retiree's money as a monthly annuity will always come in for the rest of the retiree's life. If you're afraid someone has or will have more control over your money than you, then consider the annuity.
I am newly retired and would like to know if I have to pay fees if all my money is in the G fund? How are these fees determined and where can I find the information on how much these fees are?
I am currently planning to retire at 62 which is also when I will have 10 yrs of federal service. If I roll my TSP to an IRA, at 59.5, will I incur the 10% penalty? Would it be better to leave my TSP alone and roll it when I retire?
Your videos are always helpful to me as a retired Federal Employee
Hi, thanks for the info. I did retire in the year I turned 55. I have an outstanding TSP loan what would be a smart strategy for this situation. With respect Thanks
Wow I was set on TSP but I'm convinced that I may roll it over to my old 401k when I worked in corporate. Everything is the same except it has more control.
Before making a withdraw, why not transfer all your money to G. After with draw reallocate ?
This an excellent video. I didn't know Federal employees could take their TSP out without any penalties as long as they hit 55 years old and meet their retirement requirements. I had always thought we had to wait until 59.5 to start retrieving from the TSP.
I can retire at 55, but I'm planning to wait until 57, so I don't get the 10% penalty taken out from my pension (5% per year). I always thought I would get my pension, plus the FERS supplement at 57, and then I had to wait until 59.5 to start retrieving money from my TSP. Extremely happy to learn that is not the case and I can get all three (3) out at the same time. Well, FERS and FERS supplement and start retrieving TSP as soon as I retire at 57.
It is sad that Federal employees are not provided with this information. Thanks for your channel and all the excellent information you are providing for us.
When you move a TSP over to say a Roth IRA you still have to pay taxes and now you are subject to the 10% fee when you withdraw as opposed to the TSP so I am not sure of the benefit other than a bit more flexibility.? Husband is retiring at 60 with 38 yrs in.
When I retired I put it all in the G fund for safety pending my military reserve retirement kicking in. Then I'll reallocate it to the C. S, and I funds.
If you do shift to a Roth IRA, isn't there a "five-year rule" meaning that you cannot withdraw from that Roth without penalty unless you held it for more than 5 years??
Let's say you have a million in the traditional TSP. I'd direct rollover 75% into a traditional CD IRA. I've seen some at 5% for 5yrs. Have that interest deposited monthly in my checking account. Of course it would be with several credit unions for NCUA protection. Simple guaranteed income locked in for 5yrs so there's flexible without all the fees and commissions of annuities. The other 25% exposed to market for continued growth.. or whatever mix works for you. Then add SS and pension. Really great if your debt free also.
Income (immediate) Annuities DO make sense, and are a great addition to a retirement – WHEN they aren't the only source of a retirement portfolio. Tip – do your annuity homework and research yourself to avoid a financial planner / broker making a commission. A good 20 year certain period Income Annuity right now will pay 50% over your initial investment amount over the 20 year course.
Is it possible to migrate money from your TSP into a Roth IRA from age 62 thru age 72) that is part of a revocable family trust? If so, how would that best be accomplished?
So!!! Let continue with my SALES and return my INWARDS back into my STORE in PERSON ON PHONE CALL .REGARDS
Thank you. My HOLY REGARDS to you JUMIAPAY in my COUNTRY NIGERIA.REGARDS.
hello , I am getting out of government at age of 53 with 20 years ….. can i start getting out my TSP at age of 55 without 10 % penalty fee ?
A little too late I am on my second paycheck from tsp and I wish I knew about that rule that you said about
The annuity
The rule of 55 is like holding a winning lotto ticket. Thank you whoever designed this golden ticket.
I have my Roth account with Fidelity for more flexibility and growth potential. More than likely I'll move my TSP to Fidelity. Good information Thanks!
Thanks a lot for your videos that help us to make better decisions. I going to retire at the end of this year, I am 68 years old and I had been loosing money , And I feel confused to the next move I have to make , but this video show me that the right thing to do is move my tsp to the Ira. Thanks again for your great information
What if I retired early on ssdi
at 50 with a tsp. Do I still qualify for withdrawals at 55 with no penalty? I also put in 25yrs of service. Thanks
Remember, Haws is still there to make money… (You may also make more money – with risk and stress – all a balance you must accept)
Great info! When I retired I rolled over most of my TSP to an IRA because of the IRA’s flexibility and broad choices for investments. I’m about to liquidate my TSP completely as I’m now 60 so no longer have to worry about the rule of 55. Additionally, the TSP’s website has always been cumbersome and the new website is a mess. I’ll be happy to not have to deal with that any longer.
My main complaint is you cannot adjust monthly TSP payments on website. You have to call to do this. The old website allowed you to make changes online.
The best feature of the TSP is the G fund which has a risk-free rate of return better than any IRA money market fund. I plan to keep my cash in the G fund during retirement and move my stock and bond investments to IRAs.
One more TSP rule that really bothers me if I pass on before my wife and how it works when she passes on. From the TSP beneficiary booklet, "Death benefit payments made from your beneficiary participant account must be paid directly to your beneficiary(ies). These payments are subject to certain tax restrictions and cannot be rolled over to an IRA or eligible employer plan. In addition, your beneficiary(ies) will have to pay the full amount of taxes on the taxable portions of the payment in the year it is received." My wife and I want to pass on an inheritance to our kids, but they would be hit with huge taxes all in one year. Isn't this also a good reason to move my money out of TSP and into a Vanguard or Fidelity IRA?
A couple things he left out. If you retire under the Safety officer program you get your TSP penalty free if you retire in the year you turn 50 not 55. That is for Firefighters, Secret Service, Air Traffic Controllers… Also you don't have to do an all or nothing when transferring out of the TSP. When you retire you can get more free dinners from investment firm seminars that want your money. If you want to roll money out of your TSP for more flexibility such as a Traditional IRA or even a self directed IRA always keep a small amount in the TSP. As long as you do that you can always roll back in to the TSP. I have never seen less management fees than the TSP. They will always be low because the Federal Government wants TSP funds high to offset other Governmental areas. Edward D Jones, Thrivent, Ameriprise and all the others will charge a much higher fee.
I canceled a Insurance policy @304k with the 30 day no penalty return. They sent me a check of the full amount I rolled over. What do i do with it as far as taxes go. I would like to know more about IRA'S.