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In retirement? This one’s for you. You asked, and we’ll answer: We’ve created a new series for those who have reached the retirement phase of their journey. It is just for you, and the content is almost exclusively based on hundreds of questions that participants sent us this spring about living in retirement. Since you’re a part of our “in” crowd, over the next few weeks, we’ll send you details about required minimum distributions, managing investment return and risk, withdrawing from traditional vs. Roth balances (including Roth in-plan conversions), tax rules, and more.
A recent national survey (not specific to the TSP) suggests that almost half of retirees across the United States do not have a consistent strategy for how to withdraw from their accounts. Whether you have a strategy in mind or you haven’t thought about it yet, we hope our new series will help you get the most out of your TSP.
Not retired? Our records indicate that you've left federal service and are age 60 or older. If you are not retired or prefer not to receive this series, you can easily unsubscribe. (This link will not remove you from other TSP emails.)
You can stay with the TSP forever if you choose
We’ll start with a big one: When you retire, you don’t have to do anything with your TSP account immediately. We get this question a lot and continue to hear from participants who don’t know that keeping their money in the TSP is an option. Some were even told incorrect information during pre-retirement seminars, so we want to make this point clear.
You can keep your TSP account for as long as you like if you maintain the minimum account balance of $200. You don’t have to remove any money from your savings until you reach the age that the IRS requires you to start taking required minimum distributions (RMDs). And even then, you can stay with the TSP.
After you’ve reached your RMD age, we'll automatically send you a payment to satisfy any required amount before the deadline each year. If you’re already taking withdrawals when you reach RMD age, it’s possible that the amounts you take out will be enough to satisfy your RMD for the year. If not, we’ll send you the difference.
Many retirees decide to keep their savings in the TSP after retirement to take advantage of our low expenses, flexible withdrawal options, and easy-to-understand investment funds. You can continue to access your savings by logging in to My Account on tsp.gov, even after you’ve left federal service.
Want to consolidate? You can do it with us.
Wondering if you can still add new money to your TSP after leaving federal or uniformed service? This is another frequent question. While you can no longer contribute from payroll deductions after you leave federal service, all participants (including retirees) can roll over money from eligible retirement plans, like 401(k)s or IRAs, into the TSP. Rollovers allow you to consolidate your retirement savings in one place so that it’s easier to evaluate whether you’re on target to meet your goals with a consistent investment strategy. And because the TSP’s low-cost funds are usually less expensive, your savings could grow more quickly in your TSP account.
To learn more about what types of plans are eligible or to make a rollover into the TSP, call us on the ThriftLine at 1-877-968-3778. Select option 4 to access our rollover concierge service. With this free service, our participant service representatives work directly with your outside institution(s) to roll your other plan(s) into the TSP. (You can also log in to My Account at tsp.gov and use our online self-service tool.)
$120 in expenses per year vs. $3,000
Where you choose to keep your savings can have a big effect on your retirement income. The TSP has some of the lowest expenses in the industry, and we’re completely transparent about them.
Remember that retirement plans and investment options charge fees. You may have heard that the TSP’s expenses are lower than 99% of investment options.* The goal is to keep expenses low so that your money continues to grow in the TSP, even after you stop working.
Some financial advisors may approach you with opportunities that sound too good to be true. While qualified advisors can add value, they often charge at least 1% ($1 for every $100 in your account) each year. That's more than 25 times what the TSP cost last year.**
In other words, if your TSP balance was $300,000 last year, you paid about $120 in expenses to the TSP. If your $300,000 had been in an account with typical financial advisor fees instead, you would’ve paid closer to $3,000—in one year. Again, sound financial advice can help, but consider what the cost difference could mean over 10, 20, or even 30 years. The less you pay in fees, the more you keep—and the TSP helps make that possible.
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