Should You Roll Over Your TSP Into an IRA?

Should you roll your TSP into an IRA after you leave federal service? The author offers some pros and cons to consider.

Your TSP is an incredible investment tool, especially during your career. The question, is it worth keeping in retirement?

Many people suggest that it always makes sense to roll your TSP into an IRA, but this isn’t always the best for everyone. Let’s dig into the pros and cons. 

Pros of Keeping Your TSP

The TSP has some of the best investment options available. Not only are they relatively simple to understand, they also have very low fees.

For example, in the private sector you can expect to pay anywhere between 0.5%-2% to invest in an index fund or mutual fund. If we compare those fees to the remarkably low TSP fee of 0.04%, it is night and day.

It is very easy to find funds on the private side that have fees that are 10 to 20 times the fees of the TSP. Once you take your money out of the TSP, you don’t have the ability to invest in their funds and will most likely be subject to higher investment fees.

Cons of Keeping Your TSP

An IRA has one major advantage over the TSP: Flexibility. As long as you meet some basic criteria, you can withdraw money out of your IRA however you’d like.

With the TSP however, there are a number of rules that control how and when you can take money out. Many people find it easier to control retirement income with an IRA over the TSP.


It usually makes the most sense to keep your money in the TSP as long as you aren’t withdrawing regularly. This way you can take advantage of the low investment fees in the TSP until the flexibility of an IRA becomes more practical. 

But it is always important to remember that this solution might not be a perfect fit for you. These are just general principles and it is your responsibility to apply them to your personal situation so that you can make the best decision for you.

About the Author

Dallen Haws is a Financial Advisor who is dedicated to helping federal employees live their best life and plan an incredible retirement. He hosts a podcast and YouTube channel all about federal benefits and retirement. You can learn more about him at Haws Federal Advisors.