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Dallen Haws at Haws Financial Planning
Sierra Vista, AZ
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Your TSP is an incredible investment tool, especially during your career. The question, is it worth keeping in retirement?

Many people suggest that it always makes sense to roll your TSP into an IRA. But this isn’t always the best for everyone. Let’s dig into the pros and cons.

Pros Of Keeping Your TSP
The TSP has some of the best investment options available. Not only are they relatively simple to understand, they also have very low fees. For example, in the private sector you can expect to pay anywhere between 0.5%-2% to invest in an index fund or mutual fund. If we compare those fees to the remarkably low TSP fee of 0.04%, it is night and day. It is very easy to find funds on the private side that have fees that are 10 to 20 times the fees of the TSP. Once you take your money out of the TSP, you don’t have the ability to invest in their funds and will most likely be subject to higher investment fees.

Cons Of Keeping Your TSP
An IRA has one major advantage over the TSP. Flexibility. As long as you meet some basic criteria, you can withdraw money out of your IRA however you’d like. With the TSP however, there are a number of rules that control how and when you can take money out. Many people find it easier to control retirement income with an IRA over the TSP.

Conclusion
It usually makes the most sense to keep your money in the TSP as long as you aren’t withdrawing regularly. This way you can take advantage of the low investment fees in the TSP until the flexibility of an IRA becomes more practical.

But it is always important to remember that this solution might not be a perfect fit for you. These are just general principles and it is your responsibility to apply them to your personal situation so that you can make the best decision for you….(read more)

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When it comes to retirement savings, many individuals have the option of rolling their Thrift Savings Plan (TSP) into an Individual retirement account (IRA) once they leave federal service. This decision can be a big one and it’s important to carefully weigh the pros and cons before making a move.

One of the main advantages of rolling your TSP into an IRA is increased flexibility. With an IRA, you have more control over your investments and can choose from a wider range of options compared to the limited choices available in the TSP. This can be particularly beneficial if you have specific investment goals or want more customized options for your retirement savings.

Another advantage of rolling your TSP into an IRA is that you may have access to a wider range of withdrawal options. While the TSP has strict rules and restrictions around withdrawals, IRAs typically offer more flexibility in terms of when and how you can access your funds. This can be especially important if you need to make withdrawals for emergencies or unforeseen expenses.

Additionally, rolling your TSP into an IRA can provide greater estate planning options. With an IRA, you can designate beneficiaries and have more control over how your assets are distributed to heirs. This can be beneficial if you want to ensure that your loved ones are taken care of after you pass away.

However, there are also some drawbacks to rolling your TSP into an IRA. One major consideration is fees. IRAs often come with higher fees and expenses compared to the TSP, which has some of the lowest fees in the industry. It’s important to carefully research and compare the fees associated with both options before making a decision.

Another potential downside of rolling your TSP into an IRA is that you may lose some of the unique benefits of the TSP. For example, the TSP offers the G Fund, which is a government securities investment option that is not available in IRAs. The G Fund has historically provided stable and consistent returns, making it a popular choice for many TSP participants.

Ultimately, the decision to roll your TSP into an IRA is a personal one that will depend on your individual financial goals and circumstances. It’s a good idea to consult with a financial advisor to help you evaluate your options and make an informed decision. They can help you consider factors such as fees, investment options, withdrawal rules, and estate planning implications to determine the best course of action for your retirement savings.