Should You Roll Your TSP Into A…
#thriftsavingsplan #TSP #militarymillionaire
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I am getting asked what you should do with your Thrift Savings Plan after exiting the military more and more frequently. While my default answer is “nothing, leave it alone and benefit from the compound interest, and knowing that your future is secure.” I understand there are several alternatives that could prove to be worth your time.
In this article I want to explain what some of these options are, and why it may (or may not) be beneficial for you to roll your TSP into these investment vessels.
Keep in mind that I am not a licensed financial advisor, just somebody who has done a lot of research. Also, these are just my opinions, be sure you do your own homework and come to your own conclusions as well.
On the other hand, keep in mind that I will not receive a commission of any type from you rolling your TSP over, but many people do. Always remember to ask yourself what filter somebody is using when selling you on the idea of rolling your TSP into a specific asset class. They just might be incentivized by a commission payout to recommend it to you.
Should You Roll Your TSP into a…
When you move funds out of your Thrift Savings Plan and into another asset class it is referred to as rolling your TSP over.
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My name is David Pere, I am an active duty Marine, and have realized that service members and the working class use the phrase “I don’t get paid enough” entirely too often. The reality is that most often our financial situation is self-inflicted. After having success with real estate investing, I started From Military to Millionaire to teach personal finance and real estate investing to service members and the working class. As a result, I have helped many of my readers increase their savings gap, and increase their chances of achieving financial freedom!
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LEARN MORE ABOUT: Thrift Savings Plans
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For those of you that prefer to read, here is the article I wrote about this issue: https://www.frommilitarytomillionaire.com/tsp-after-the-military/
I am a bit confused by your comments regarding fees for rolling the TSP to an IRA. That is what I plan to do when I retire and in my research I have not seen anything that mentions a fee for doing so. As far as I know the TSP does not charge for a transfer out and brokerages do not charge for a transfer in. If you do a direct transfer there are not even tax withholdings. Where did you see something about a fee for TSP rollovers?
I plan on transferring my TSP to my IRA because I cannot implement my investing strategy, having a small cap value tilt, in the TSP. Even if someone wanted to invest in funds that track the same indexes the TSP funds follow, it can be done for less at low cost brokerages such as Fidelity. Other than using the G Fund, I see no reason to stay in the TSP after separation/retirement.
One of the most important reasons for leaving your TSP where it is, is the penalty. If you leave it you can start taking withdrawals at 55 vs 59 1/2 without paying the 10% penalty. This is a huge advantage. If you roll it into a self directed, you will not get this benefit and the penalty cannot be avoided for the most part until you are 59 1/2.
What if you can get a better return in the roth ira like 13% instead of 6% that you would get from the 5 tsp funds you can invest in
Good advice!
I heard you can’t take a TSP Loan IG you’ve already exited the military such as in retirement.