Traditional TSP Rollover to Traditional IRA

[jethro]

I'm doing a little advanced financial planning and wanted to hear what anyone has to say about rolling over a TSP to an IRA. My TSP is all traditional and I'm thinking about rolling it over to a traditional IRA when I retire. Has anyone done this? Any tips? Thanks.

[crondanet5]

Many have done this. I am in favor of it because until you roll your account out of the TSP and into a rollover IRA it technically belongs to your employer. And who wants to be stuck with only 2 IFTs a month? There are mutual funds that mirror the TSP Funds so you can continue to grow your retirement account.

[hulk]

Just don't forget to figure yearly fees in your calculation on return on investment. The TSP has the lowest in the industry.

[Scorpio70]

I happen to like the TSP, and plan to keep my money in it as long as possible. I have other accounts outside of it, and my Vanguard Admiral shares are still more expensive.

[rcozby]

Just make sure you're over 59.5 years old before you roll or you'll pay a 10% penalty if you withdraw prior to then.

[bad70nova]

I have 7 more years till I will retire. I plan on staying in the TSP, as two IFT's are plenty and actually keep me from getting into to much trouble. I plan on doing one big withdraw when I retire and throwing that in the bank for extra spending, then doing monthly withdraw set up. I know some hate TSP some Love as for me I think it will suit my needs at retirement.

[JimmyV]

Just make sure you're over 59.5 years old before you roll or you'll pay a 10% penalty if you withdraw prior to then.

If you are rolling over to a traditional IRA I don't believe there would be a 10% penalty as long as it goes directly into the traditional IRA. Please correct me if I am wrong because I am considering this as well.

[rcozby]

No penalty to roll, but there is a 10% penalty if you withdraw from an IRA prior to age 59.5. You can withdraw from TSP at age 55 as long as you're separated from federal service.

[wisepierre]

You can withdraw contributions to a Roth IRA before age 59.5 with no penalty, but only the contributions (because you've already paid your taxes on them).

I remain unsure if, when rolling over your Roth TSP to a Roth IRA, this remains true for your Roth TSP contributions.

[rcozby]

No penalty to roll, but there is a 10% penalty if you withdraw from an IRA prior to age 59.5. You can withdraw from TSP at age 55 as long as you're separated from federal service.

One exception I'm aware of is that you can take "72(t)" withdrawals from IRAs prior to age 59.5 without penalty. These are based on your life expectancy and are essentially non-adjustable once you begin (or penalties apply).

[evilanne]

rcozby is correct, you have to be careful to follow the rules under 59.5 to avoid any penalty. Life expectancy or substantially equal payments exception can be done with with IRA just be sure to know the rules so that you avoid any penalty. This provides a good summary: https://www.irs.gov/retirement-plans/pl ... tributions If you are under 55 (50 for LEOs) your options are more restrictive.

[rmcdeepsea]

It makes sense to me to leave a portion of your monies in the TSP to take advantage of the very low fees. Probobly the portion I intend to use as wealth preservation and be very conservative with. Rolling a portion out to be able to invest as I see fit makes sense also, since there is a whole world of investment opportunities out there. For now with as busy as I can get while on active duty, I do the majority of my investing through the TSP, primarily because of the ease of it!

[head]

I retired on 12/31/2016 and I am in the process of transferring a hundred thousand $ to Vanguard, VWINX. That way I can access the account when needed with money being deposited in my bank account in 3 business days. The rest of my money I will leave in the TSP until I am forced to withdraw at 70 1/2 years of age.

[TSPBuilder]

Just don't forget to figure yearly fees in your calculation on return on investment. The TSP has the lowest in the industry.

Profunds has been waiving all fees (I do pay $15/yr for an IRA maintenance fee) for the past ten years at least. They also have inverse funds so you can make money in down markets. They also offer leveraged funds that are almost spot-on to their index and then multiplied by 1x, 1.5x and 2x. Pretty cool stuff!

[mindofmush]

You can withdraw contributions to a Roth IRA before age 59.5 with no penalty, but only the contributions (because you've already paid your taxes on them).

I remain unsure if, when rolling over your Roth TSP to a Roth IRA, this remains true for your Roth TSP contributions.

It is true that you can withdraw the "contributions" from the Roth IRA after transferring it from the Roth TSP.

But to withdraw your profit without penalty from a Roth IRA, you must meet both the 59.5 age and the 5 years from first establishing the Roth IRA. I set up my Roth IRA at age 54 so that when I transfer my Roth TSP to my Roth IRA, I'll already have met both requirements.

If you are merely transferring your money from TSP managed mutual funds to Fidelity/Vanguard/Whoever managed mutual funds, then stay with the lower fees of the TSP. (Remember to transfer Roth TSP to a Roth IRA before 70.5 age to avoid the minimum required withdrawls.)