What are thrift savings plan rollovers – What is a thrift savings plan rollover for retirement? 1-800-566-1002. What are the best type of tsp rollovers for retirement and learn how you can avoid the most common mistakes that individuals have made when looking to roll over their thrift savings plan.

Accessing Your TSP Money

Loans – Anyone who is actively employed that has a vested balance in the TSP may use TSP 20 to request a general purpose loan or a loan for the purpose of a residence. The amounts you can take, the repayment schedule, and consequences for nonpayment on the loan should be checked with TSP so you understand. However it is an option to you which provides flexibility, and perhaps the opportunity to avoid much higher interest debt or a financial emergency.

Hardship Withdrawals – While working, but prior to age 59.5 it is also possible to access funds if it can be documented that there is a financial hardship. This type of withdrawal does not prevent the 10% penalty, or other taxes, it simply allows the withdrawal to occur when it otherwise wouldn’t be available. In addition any contributions through payroll to the TSP are disallowed for the subsequent 6 months. See TSP form 76 and contact TSP for details.

A Brand New Option For Certain Federal Employees – Just recently here in 2015 it was passed that employees in federal law enforcement, customs and borders protection officers, federal firefighters, and air traffic controllers who separate during or after the year in which they turn age 50 may withdraw funds directly from their TSP balance and avoid the 10% penalty that previously applied. This does not work if you do any of the following: take a withdrawal before the end of 2015 as it starts next year, retire from one of these occupations prior to age 50, or roll over your balance to an IRA and then elect a withdrawal from there.

Age Based

Age 55 – If you leave government service in the calendar year that you turn age 55 or older, rather than 59.5, then you can access the funds in your TSP as a direct withdrawal and not incur the 10% tax penalty. The withdrawal you take in hand will still incur income taxes. Rolling over these funds to an IRA cause this temporary period of avoiding the 10% penalty to end and withdrawals from the IRA will carry the 10% penalty until age 59.5

Age 59.5 – This is the easy one. If you are still actively employed with the federal government and you are over the age of 59.5, meaning it is less than 6 months to your 60th birthday, than you are able to access your funds one time. This one time transaction may be a withdrawal directly to you or it may be a rollover to a traditional IRA in the marketplace. It may account for some of the money or all of the money. Your contributions through payroll will continue to go into your TSP balance. It will simply start from zero again if your one time transaction accounted for all the money previously there. This is TSP Form 75.

Age 70.5 – If you have retired from federal service, but not rolled over your balance, distributed it as a taxable check, or turned it into a second annuity beyond FERS/CSRS then you will have to start taking taxable withdrawals from your TSP balance upon reaching age 70.5. Currently this is equal to 3.65% of the account balance and increases as a percentage of it over time.
Monthly withdrawals

Annuity – Upon retirement some choose to add a lifetime monthly annuity check on top of their FERS or CSRS pension and any Social Security to which they are entitled. This is done by electing an annuity with the TSP balance. For reference, this option is the one outlined on each statement of your account you receive that estimates the monthly check you would receive based on your age and the balance. Although this is not often done for its disadvantage of giving up control of the funds, there is no one right answer for all people. Also options can be chosen that assure a payment continues to a spouse, or a continuation of the payment for at least a fixed period of years occurs, among other options.

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When it comes to planning for retirement, one option that many individuals consider is a thrift savings plan (TSP) rollover. This process allows individuals to move their retirement savings from a TSP account into another qualified retirement account, such as an individual retirement account (IRA) or an employer-sponsored 401(k) plan.

Why would someone consider a TSP rollover? There are several reasons. First, some individuals may want to consolidate their retirement accounts into one place for easier management. By transferring funds from their TSP account to an IRA or 401(k), they can have a clearer picture of their overall retirement savings and potentially reduce administrative fees.

Another reason individuals choose to rollover their TSP account is to access more investment options. While the TSP offers a limited number of investment funds, other retirement accounts may provide a wider range of investment options, including stocks, bonds, and mutual funds. With a TSP rollover, individuals can diversify their investment portfolio and potentially seek higher returns.

So, how does a TSP rollover work? The process is relatively straightforward. First, you need to decide where you want to move your funds. This could be an IRA or a new employer-sponsored retirement plan such as a 401(k). Make sure to research the features and fees associated with each option to determine which one best fits your needs.

Once you have chosen the destination for your rollover, you will need to initiate the transfer. This can usually be done by contacting the administrator of your new retirement account and requesting the necessary paperwork. They will guide you through the process and may require you to fill out certain forms.

One important thing to note is the distinction between a direct rollover and an indirect rollover. With a direct rollover, the funds are transferred directly from your TSP account to your new retirement account. This is the preferred method since it avoids any tax implications and penalties. On the other hand, an indirect rollover involves you receiving the funds from your TSP account and then manually depositing them into your new retirement account. However, this method requires strict adherence to timing rules and may result in tax consequences if not completed correctly.

It is crucial to consult with a financial advisor or tax professional before initiating a TSP rollover to ensure you understand the potential tax implications and any penalties that may apply. They can provide valuable guidance and help you make an informed decision based on your specific financial situation.

In summary, a thrift savings plan rollover can provide individuals with greater flexibility and control over their retirement savings. Whether you want to consolidate your accounts or seek more investment options, a TSP rollover can help you achieve those goals. Just make sure to do your research, seek professional advice, and follow the proper procedures to avoid any unexpected tax consequences.