Should I Put My TSP Into an IRA So I Can Retire When I Want?

February 9, 2016 4:00 AM
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Q: I am 61 and have heard that I can take my money out of the TSP and place it into an IRA. I have been trying to manage my TSP the best that I can, but, my TSP has lost 20% this past year. I want to retire next year. Should I place my TSP into an IRA so I can still retire when I want?

A: This is really 2 questions:

  1. Should you move your TSP to an IRA?
  2. With the current losses in your TSP, will you still be able to retire at the time you had hoped?

These are questions I have been hearing a lot recently. However, I can’t offer simple yes or no answers.

There are several variables to weigh before determining a realistic retirement date. Equally complex is the question of rolling over your TSP into an IRA.

For most, I believe the TSP is a great place to save money. It offers a good match, it is relatively inexpensive, provides tax deferral and it makes saving easy since it comes out of Feds’ paychecks.

So, as a current vested Federal employee over 59 ½ years old, you have 4 options to consider. Keep in mind that you can engage in any combination of these options.

  • Leave the money in your TSP.
  • Roll over to an IRA.
  • Cash out the account value.
  • Rollover to an employer sponsored plan. (Should you decide to go back to work and the new plan allows it.)

But, in my opinion, when a vested Fed leaves service, retires or turns 59 ½, the TSP is not typically the best choice. It has limited investment choices, is somewhat difficult to take money out of and has no experienced guide available to assist Feds in making intelligent money choices. I think working with a qualified Federal Retirement Specialist is a much better choice than trying to manage your restrictive TSP, on your own.

My office offers a free proprietary service to help answer questions such as yours called the Federal Retirement Readiness Review (FRRR). Visit my website to learn more or schedule a free, no-obligation consultation.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.  Investing involves risks, including the loss of principal.  No strategy assures success or protects against loss.

Securities offered through LPL Financial, member FINRA/SIPC.  

Silverlight Financial donates free/no obligation Federal Retirement Readiness Reviews. These reviews culminate with a no cost phone consultation with founder, Randy Silvey. To personally request your FRRR email: [email protected]

© 2020 Randy Silvey. All rights reserved. This article may not be reproduced without express written consent from Randy Silvey.


About the Author

Randy Silvey is the published author of You FIRST, Federal Employees Retirement Guide, one of the bestselling books of its kind on Amazon and Kindle. For over 14 years, he’s been educating and guiding Feds in pursuing wealthier retirement lifestyles. Randy can be reached at 816-524-1515 or visit his website at Securities offered through Infinity Financial Services. Member FINRA/SIPC.