Q: I am retiring next year and I read that a Federal Employee should always roll their TSP into an IRA because they have better investment and withdrawal options. What do you say?
A: We need to be careful in saying “what every Federal Employee should do.” One of my personal peeves is general financial advice. Everyone’s situation is different. Each Federal employee is unique in their age, risk tolerance and plans for their money.
What a Federal Employee should do is establish their goals for their TSP assets. Once those goals are established they can decide whether or not those goals can be achieved inside their Thrift Savings Plan. If their goals are unattainable or it might be in-efficient to achieve those goals inside the TSP then rolling it into an IRA could be advantageous for them.
Another great thing a Federal Employee might want to do is get help from a financial consultant who understands the Federal Benefits System. That consultant can help the federal employee establish and plan for their goals. That way instead of getting general advice they can get advice specific to their situation.