Does Dave Ramsey Recommend Rolling Over Your TSP to an IRA?

What is Dave Ramsey’s advice about doing a TSP rollover to an IRA after retirement?

What does Dave Ramsey suggest to federal employees who are considering a TSP rollover to an IRA after they retire?

While everybody’s personal financial situation is different and it is always advisable to consult a financial advisor about your unique circumstances, here is some general advice Ramsey gave to a Postal Service employee nearing retirement who asked this question.

Dave Ramsey suggested to this employee during a call on his radio show that he roll his TSP over to an IRA after retiring. Ramsey explained his reasoning this way:

I’d roll it to an IRA outside [of the TSP] – you can do better with open market mutual funds than the Thrift [Savings Plan] options give you. I recommend you spread your IRA and all long term investing that you have control over the options across four types of mutual funds: growth, aggressive growth, growth and income, and international; that’s what my personal IRAs and 401(k)s are in.

The Thrift is not a bad plan, it’s just that when you are in the open market you’ve got more options, and more options usually mean that you can get a better rate of return if you do your research.

Dave Ramsey’s Advice on IRA Rollovers

Dave Ramsey always recommends in general that people roll over their TSP or 401(k) accounts to an IRA after they leave their jobs because it gives them more control over the investments and therefore a potential for getting better returns on those investments over the longer term.

What Does Dave Ramsey Recommend for the TSP?

Dave Ramsey recommends that federal employees stick with the TSP’s core stock funds to earn the best investment returns over the course of their federal careers. He suggests that federal employees stick with the C, S, and I Funds and avoid the G, F and Lifecycle funds completely.

 Ramsey recommends this allocation for federal employees to use in their TSP accounts:

  • 60% in the C Fund
  • 20% in the S Fund
  • 20% in the I Fund

Federal employees who need advice on how to invest their TSP accounts or how to develop a financial plan that meets their needs should speak to a qualified financial advisor who specializes in workin with federal employees.

About the Author

Ian Smith is one of the co-founders of He has over 20 years of combined experience in media and government services, having worked at two government contracting firms and an online news and web development company prior to his current role at FedSmith.