Review options for what to do with TSP after leaving the military, and pros/cons of each. Leave it where it is, rollover to new company 401(k), rollover to IRA, cash it out (bad!), or annuitize it? Rule of 55 and other key considerations….(read more)

LEARN MORE ABOUT: Thrift Savings Plans

REVEALED: Best Investment During Inflation

HOW TO INVEST IN GOLD: Gold IRA Investing

HOW TO INVEST IN SILVER: Silver IRA Investing

The Thrift Savings Plan (TSP) is a retirement savings and investment plan created for members of the military and federal government employees. It is a highly beneficial program that offers individuals the opportunity to save funds towards their post-retirement life and enjoy financial security in the long run. Once military or government service is complete, individuals have several options for what they can do with their TSP. In this article, we will discuss some popular choices available.

1. Leave the Funds in the TSP: One simple option is to leave your funds in the TSP. This is especially a good idea if you are satisfied with the investment options and fees associated with the plan. By leaving the funds untouched, they can continue to grow tax-free until you decide to withdraw them during your retirement years.

2. Roll Over to a Traditional Individual retirement account (IRA): If you prefer more control over your investment options or are interested in exploring novel avenues, rolling over your TSP funds into a traditional IRA is an excellent choice. By doing so, you can open up a wider range of investment opportunities and potential for growth. Unlike TSP, where the investment options are limited to a few funds, an IRA grants you access to a broader range of stocks, bonds, mutual funds, and other assets.

3. Convert to a Roth IRA: Another option to consider is converting your TSP funds into a Roth IRA. Unlike a traditional IRA, contributions to a Roth IRA are made with post-tax dollars. One significant advantage of doing this conversion is that future withdrawals from your Roth IRA will be tax-free, which can be advantageous if you expect your tax bracket to be higher in the future. However, keep in mind that converting to a Roth IRA will result in a tax liability for the converted amount in the year of the conversion.

4. Move to an Employer-Sponsored retirement plan: If you secure employment in the private sector after completing military or government service, moving your TSP funds to your new employer’s retirement plan might be an option worth considering. It allows you to consolidate your retirement savings into one account and take advantage of your employer’s specific benefits, such as matching contributions.

5. Cash-Out or Withdraw: While possible, it is generally advised against cashing out or taking a lump-sum withdrawal from the TSP after military or government service. This option may incur significant taxes and penalties. Additionally, by withdrawing the funds early, you lose the potential for compound growth over time.

Before making any decision regarding your TSP post-military or government service, it is crucial to assess your financial goals, investment risk tolerance, and consult with a financial advisor. They can guide you in understanding the potential benefits and drawbacks of each option, considering your unique circumstances.

In conclusion, the Thrift Savings Plan (TSP) offers military and government employees an exceptional retirement savings opportunity. After completing your military or government service, you have various choices to consider, such as leaving your funds in TSP, rolling over to a traditional or Roth IRA, moving to an employer-sponsored retirement plan, or cashing out. Each option has its own advantages and disadvantages, so it is essential to carefully evaluate the best option that aligns with your long-term financial objectives.