Are you leaving federal employment, retiring from the government, getting out of the military, or separating from federal service? A big question you have to ask is what to do with your TSP? Whether you’re retiring with a TSP or getting a new job you have the following 3 options…
1) WITHDRAW THE MONEY FROM YOUR TSP:
If you choose to cash out your TSP before age 59.5 you will be hit with taxes and a 10% penalty. However, if you choose to rollover your TSP to a qualified retirement account, such as a 401k or IRA, you won’t be penalized.
2) LEAVE MONEY IN TSP:
If you are age 59.5+, you can start withdrawing monthly payments from your TSP. If you worked up until age 55 with the feds, you can start withdrawing early at age 55. If you were a “Special Category” employee (ie Law enforcement, firefighter, air traffic control) and you worked with the government until age 50 you can start withdrawing early at age 50. Once you leave the military or federal government you can no longer contribute more money into your TSP but you can change around your investments within the TSP.
3) BUY ANNUITY WITH TSP:
At retirement age you have the option to buy an “Annuity”. The more money you have in your TSP the higher the annuity will pay out. An annuity is similar to an insurance plan, it’s a guaranteed agreement unless of course the company you made the agreement with goes under. Right now MetLife is selling the annuities for the TSP. You are trading the lump sum amount of your TSP for a [safe] fixed monthly payment (such as $1,000/month) for the rest of your life. This differs from Option 2 because you are limiting risk but sacrificing that you could have made better monthly returns by doing Option 2.
TSP vs IRA: Rolling over your TSP to an IRA is a popular option. The benefit to a TSP is you may be able to withdraw money before age 59.5, unlike an IRA. The benefit to an IRA is you have many more investment options, better control, and a more user friendly company to work with. If you do want to rollover your TSP to an IRA follow these steps: 1) Open an IRA with a company like Fidelity, Schwab etc. 2) Fill out form TSP 70, and 3) Invest the money once it has been transferred into your IRA.
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00:00 Intro
00:32 Option 1 Withdraw
01:20 Option 2 Leave it in TSP
05:23 Option 3 Buy an Annuity
07:12 TSP vs IRA
09:04 How to Rollover TSP…(read more)
LEARN MORE ABOUT: Thrift Savings Plans
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HOW TO INVEST IN SILVER: Silver IRA Investing
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I retired last year. Money is still in G Fund in TSP earning 1.5% interest. Should I rollover to an IRA account in Fidelity and then buy MYGA (Multi-Year Guaranteed Annuities at 4+ percent interest rate)? Thanks Tim.
Can u roll over TSP to a Roth IRA set up through a bank? I remember in regards to retirement account the rule of thumb is once you don't have the money in your possession u avoid the fee?!?!
I had watched a different video and the guy was explaining the difference between a transfer versus rollover. Any insight into this? It sounds like I may be on the hook for the 20% taxes on the rollover and truing up that amount until I prove funds were moved within the 60-day time limit. THEN the money will be reimbursed. I'm trying to move funds out of my TSP and into my Fidelity this week.
I’m 67 yoa, is it wise to sart taking money out of my TSP. And, if so, should I take only the amount for life expectancy?
MRA is AGE 56 for regular fed with 20 yrs service.
Thank you Brotherman, you are a blessing. I appreciate your knowledge and support. Time to roll it over to a Rollover IRA and sell covered calls.
I do have a small question. I am 59 1/2 and I roll my entire TSP into the rollover IRA with Charlie Schwab. When am I taxed? When I move it from the IRA to my bank account?
I also heard that when you trade stocks and options from your IRA, you dont pay the 30% capital gains tax. Is this true? Thanks again, you rule.
I’m retiring the government service and I’m 66. I need the money to pay my closing cost of the the house I am buying…how do I maneuver my money without heavy taxation…please advise…
Incorrect info provided about not being able to add funds to your TSP after retiring or leaving the government. You can roll other retirement funds, like a 401k, into the TSP using TSP Form 60, and enjoy the rock bottom mgmt fees. You can also roll portions out to your IRA or Roth.
If I'm much older a traditional IRA is probably best
Buying an annuity you can die a few days after retirement then you lose it all. Best to leave it alone or transfer some or all to an IRA. That way if you roll it over, you might delay the tax, else if you do a withdraw of say $1,000, you're taxed 20% and only get $800. Most of use won't earn enough to pay taxes if and when we file so why give up the 20% upon withdrawal, when we can earn interest on it with a good money market savings account. However, remember TSP has much lower fees than non-federal organizations. My thought, roll over what you plan to use to an IRA then do distributions as needed or required. pay taxes when you file if you do own any, otherwise, don't.
vanguard???
What happens when the TSP account has both roth and traditional? My contributions are Roth, and my employee’s are traditional, right? How does that transfer to a Roth IRA? Will they be the one to determine the amount of my pre-taxed money?
Is that you tv with the flames going in the background?
Great video. When it comes to TSP though, don't use the word Roll Over because that means that they send the money to you. Usee the word Transfer. Also, you cannot transfer TSP to Roth. You have to transfer TSP to Traditional IRA to Roth IRA
Aren’t there more than 5 TSP funds now?
If I transfer it to a roth ira can I withdraw it from there without penalties?
Before any federal employee leaves the tsp for something else please ask the person asking you to do so one what is their commission what are they getting out of this to how much is this new fund a IRA going to charge for administration tsps rates are $0.45 per thousand dollars see if you can beat that
Absolutely wrong. Please evaluate the information you are giving out.
If you retire at 55 with 38 years service, don't I get an early withdrawal penalty?
Rollover process is a little complicated if you have tax-free contributions (ie contributions Soldiers make when they're in combat zone) —I'm dealing with this right now. TSP sent me a check (FBO) instead of to Vanguard. Now the clock is ticking to get the money out of my hands and into an IRA conversion account.
Your video is a wealth of Info. There is so much misguidance out there. I'm 50 Yeats old and still a federal worker and hit 30 years of creditable service Sept 21, 2021. What good options do I have if I walk away at the end of this year?
Hi Tim,
Wow, your video helped me a lot, you made it simple, clear, and easy to understand. Thank you. If a SCE keeps their money in the Roth tsp, do they have to wait until 59-1/2 to withdraw it? The SCE would have access at age 50 to the tsp Ira. Just wondering about the tsp Roth.
Wow! Great job explaining TSP strategies… SUBSCRIBING!!
Is there any sort of time limit as to when I can move my TSP to an IRA? I plan to retire and am not ready to move the TSP until later if that is okay.
Thanks!
So ive been trying since early 2021 to rollover my funds and the TSP website screwed up my account links so I can't submit any withdrawals. Did not lock my account but just disabled the hyperlinks.
The first rollover attempt expired and I got a rejection notice. I called in and they mailed me an incomplete packet 16 of 18 pages from what they said, and when I submitted what they gave me they gave me several different excuses why they couldn't accept it and said all they could do was mail me another packet but have not been able to restore my account. They have no 3rd method to getting your account rolled over from what their supervisors said. And i'm so frustrated that I'm considering getting a financial lawyer involved. Any suddgestions?
Well done video, thank you
Would I be tax even though it was a Roth?
I read that the max you can withdraw every 30 days is 1000$
Rules have changed
tsp 99 replace tsp 70, dont think 70 is even usable
If I separate from federal employment and l roll TSP over to a Roth IRA, it doesn’t impact my contributions for that year?
i want to roll over to my current 401k but the lady on the phone is telling me they make the check payable to me which is NOT want i want because it will make it a taxable event. I want them to make the check payable to my current employer and since im married the lady said it be made payable to both my wife and I. so there another way to go about this?
Even though I won't use this until years down the line. This is a gem of information to know for retirement involving the TSP.
Keep it in TSP. They can’t compete with the low administrative costs.
Good info Tim. No wasted time and right to the point.
Yes …. "Anything you do with the federal government is harder than it has to be"