Get out of TSP after retirement?

Managing your TSP and alternate investment options after retirement or separation from service.

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kaclemen
Posts: 42
Joined: Fri Oct 31, 2014 1:13 pm

Re: Get out of TSP after retirement?

Post by kaclemen »

Financial advisors - the biggest scam in the industry!

They have one goal and one goal only - separate you from your money. Banks were not built making profits for everyone else. They were built to churn out profits and they are setup to get their piece of the pie first then pay you the left overs.

At 27, I've educated myself through reading books like "Rich Dad poor dad" "Money:Master the game" and taking college courses on the side while obtaining my engineering degree. In addition, I've seen firsthand all the warnings nearly EVERY decent financial book warns of -- DO NOT entertain your local financial advisor PROMISING RETURNS w/"low rates."

Did you know 97.8% of all personal financers FAIL to beat the market over a 10-year cycle (S&P500 as benchmark). And the 2.2% that do manage to beat the market either don't offer services or require such an astronomical investment to participate that we will never have access to those advisors.

You can realistically make 3-6%/yr (conservatively speaking) pretty easily in TSP w/minimal fees (0.026% is INSANELY LOW). Paying someone 1.6% with absolutely NO guarantee he/she can make you any money or even break even. Take ownership of your money.

These jokers bring you in the office throw finance terms around, make you feel overwhelmed, and sell you a pipe dream that 9.7/10 times can't be achieved by an active or managed account. They literally overwhelm you and get you to believe you don't know what the hell to do on your own to manage your own money and they make you believe not only should you stay far away for the market as an inexperienced investor you should let them manage your money that you have worked so hard for your entire life. The first couple years you break even but really lose A LOT since your paying ROBUST 1.6% fee. Then the market has an unexpected downturn and your investment goes down, but guess what? You still pay 1.6%. Before you know it, you need to make 25%+ return just to recover a "correction in the market" (8-12% drop) over 3 years to offset the loss + yearly fees.

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evilanne
Posts: 1886
Joined: Thu May 14, 2015 6:52 pm

Re: Get out of TSP after retirement?

Post by evilanne »

crondanet5 wrote:And so it is with the cheapness of the TSP Program. You got a half a million bucks in there and you complain about a higher fee? What if the nonTSP investment paid double for a few pennies more? Talk to Tractor. He is my hero.


All funds will have some type of annual expense ratio. The TSP's net expense ratio is 0.029% = $0.29 per $1, 000 or $29 per $100,000 invested. Higher fees are OK if they provide better outcomes but I agree with kaclemen. Nothing that caddisfly said, however, indicated any better outcome with 5-6% return.

They are probably looking at a Balanced-Allocation Fund (Stocks & Bond Mix) or Growth/Equity-Income type fund which focus primarily on blue chip/dividend paying type of stocks. Stock exposure isn't necessarily a bad thing like ArrieS seems to imply.
Take American Funds, for example, which is popular with brokers as they have long track record for many years--Returns for American Funds https://www.americanfunds.com/individua ... ed=monthly Class A shares have high upfront load fee + an expense ratio that is below 1% for most funds. Most of the folks here would probably say that a front load of 5.75% is outrageous, but in comparison to a 1.6% annual fee for 20+ years, it sounds reasonable...so fees are relative. Some companies charge a fee to each account below a certain dollar amount which varies by company. Anyone that is considering transferring outside of TSP should be fully aware of all fees or expenses associated with the firm and the proposed types of investments they are proposing. If they are going to put you into mutual fund, do you really want to pay 1.6% fees annually? Given the new DoL rule, that may be more likely in dealing with any full service brokerage company.

sosome
Posts: 9
Joined: Sat Dec 04, 2010 10:06 pm

Re: Get out of TSP after retirement?

Post by sosome »

Should I rollover to etrade IRA? I have regular account with them, I need your opinions?

Scorpio70
Posts: 432
Joined: Thu Dec 24, 2015 11:49 am

Re: Get out of TSP after retirement?

Post by Scorpio70 »

An Annuity for a solid charity is good option.

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evilanne
Posts: 1886
Joined: Thu May 14, 2015 6:52 pm

Re: Get out of TSP after retirement?

Post by evilanne »

I don't have an opinion on etrade, but I would be curious as to how online brokerages or self directed IRAs at other companies handle life expectancy distributions for those under 59.5 and RMDs for those 70.5 and older. I would be curious if they had method that makes it easy to do and how RMDs are handled at age 70.5 to ensure you are in compliance with tax rules and that you incur no penalties or forfeit any funds.

crondanet5
Posts: 4324
Joined: Tue Aug 19, 2008 8:51 pm

Re: Get out of TSP after retirement?

Post by crondanet5 »

evilanne call them.

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evilanne
Posts: 1886
Joined: Thu May 14, 2015 6:52 pm

Re: Get out of TSP after retirement?

Post by evilanne »

If I were transferring my TSP to an IRA, I would definitely be calling & asking the different companies questions related to distributions, RMDs and the appropriate coding for tax purposes. For those of you who promote transferring TSP to an IRA after retirement, I would think that someone here should be able to address how the firm they deal with handle that without an assigned financial advisor. It is something sosome should find out before he decides to transfer the TSP account.

ngood2345
Posts: 58
Joined: Mon Mar 09, 2015 6:13 pm

Re: Get out of TSP after retirement?

Post by ngood2345 »

First, don't go with that Financial Planner. Sign up with TdAmeritrade, Scottrade or some other no fee stock broker, other than trading costs, $9.99/trade.

I left the TSP, because TSP wanted to charge me 20% Federal taxes on my withdrawals, had no way of withholding State taxes (that was my problem). Guess what I don't need to withhold 20% on my Federal taxes. Only got to change my monthly withdrawals once a year. What if I wanted to buy a car?

Buy Vanguard ETF's to match your TSP funds. VOO - C fund, VXF - S fund, AGG - F Fund, EFA or VGK - I fund. Mix and match as needed. No company has anything like the G fund. It will just be in cash. Most Vanguard ETF's are .05% to .09%, so not as good as TSP .0021% but much better than 1.65% from financial planner.

I left the TSP, left my financial planner 1%, very happy overall. Most people are leaving the financial planners and hedge funds because the ETF's / TSP Funds beat them time and time again.

Set up automatic monthly withdrawals and take out taxes fed+state with each withdrawal. Each time you take out extra money, other than monthly, take out taxes fed+state.

File for Social Security at 64 or 66 and cut back on taking money out of your IRA funds. Some people say wait until you are 70, yes this is the maximum SS but not how to maximize your IRA account.

Watch this website to see where is the best place for your money. You will do great.

Good Luck!

philmiec
Posts: 29
Joined: Thu Nov 20, 2008 5:36 pm

Re: Get out of TSP after retirement?

Post by philmiec »

I'm surprised that no one has recommended a mix of IRA and TSP. My plan is to move the equity portion of my portfolio from my TSP to my IRA. I will leave the cash portion of my overall portfolio in the TSP G fund. Just can't beat the fees!

Batillac
Posts: 9
Joined: Wed Jun 12, 2013 10:07 am

Re: Get out of TSP after retirement?

Post by Batillac »

Philmiec has a great suggestion, only move a portion out. Once you transfer into a qualified outside plan you can then return the funds to the TSP (after 2 years) if you are not happy with paying your 1.6% fee, the account management, ROI or other reason. If you close out your TSP you can never put it back so why not keep the option open? Details for deposits from qualified plans can be found in the directions to Form TSP-60.

https://www.tsp.gov/PDF/formspubs/tsp-60.pdf

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evilanne
Posts: 1886
Joined: Thu May 14, 2015 6:52 pm

Re: Get out of TSP after retirement?

Post by evilanne »

Has anyone actually rolled over part or all of TSP? If so how easy or difficult was it?
Has anyone actually rolled over IRAs into TSP? If so how easy or difficult was it?

philmiec
Posts: 29
Joined: Thu Nov 20, 2008 5:36 pm

Re: Get out of TSP after retirement?

Post by philmiec »

If you close out your TSP you can never put it back so why not keep the option open?

Exactly!

tmj100
Posts: 45
Joined: Tue Jul 02, 2013 2:16 pm

Re: Get out of TSP after retirement?

Post by tmj100 »

How about this? Rather than moving the entire amount out and closing the TSP, move out 25% to 50% into a Vanguard IRA or other low cost outfit. Use multiple investment strategies and hopefully reap the benefits. Setup the balance of your TSP as a simulated annuity, as you mentioned, and use the IRA for any emergency cash and to take advantage of other investment opportunities that are not in TSP. Just a thought.

tmj100
Posts: 45
Joined: Tue Jul 02, 2013 2:16 pm

Re: Get out of TSP after retirement?

Post by tmj100 »

hey evilanne: I did exactly what you mention and it could not have been easier. Fill out the form, send it to the IRA outfit you want and they fill in their part and they forward it to TSP admin for processing. Took about 1 month to complete.

crondanet5
Posts: 4324
Joined: Tue Aug 19, 2008 8:51 pm

Re: Get out of TSP after retirement?

Post by crondanet5 »

evilanne talk to tractor.

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Fund Prices2021-04-16

FundPriceDayYTD
G $16.56 0.00% 0.34%
F $20.66 -0.21% -2.53%
C $62.57 0.36% 11.92%
S $83.28 -0.04% 12.24%
I $38.19 0.63% 7.92%
L2065 $13.71 0.39% 10.49%
L2060 $13.71 0.39% 10.49%
L2055 $13.71 0.39% 10.49%
L2050 $27.99 0.31% 8.45%
L2045 $12.79 0.29% 7.92%
L2040 $46.72 0.27% 7.42%
L2035 $12.36 0.25% 6.82%
L2030 $41.20 0.23% 6.25%
L2025 $11.71 0.18% 4.93%
Linc $22.82 0.08% 2.45%

Pending Allocations

Under development. For now, you may view Pending Allocations by going to "fantasy TSP" and selecting "Leaderboard sort" of "Pending Allocations".

What else

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