Protecting Your TSP Account From the “What Ifs” of Life

It’s good to consider “what ifs” for when life takes unexpected turns. Here are a couple of strategies to help safeguard your TSP.

It’s good for us to consider “what ifs” when we are planning our finances (or planning our lives, for that matter). Here are a couple of what ifs.

The Bucket Strategy and the TSP

What if you were withdrawing money from the TSP and the stock market were to tank; would you be able to take your TSP withdrawals solely from the G Fund? No, you are not allowed to utilize the so-called “bucket strategy” when withdrawing from the TSP.

The bucket strategy, sometimes referred to as a time-based segmentation approach, has you allocating your money in two, or more, different accounts/funds, or “buckets”.

The first bucket would be invested in safe (presumably lower yielding) investments (like the G Fund) from which you will make monthly withdrawals for income during retirement. Ideally this bucket will have enough in it to see you through any down market in stocks.

A second bucket would be invested in riskier (presumably higher yielding) investments which will not be needed for some time. You would periodically replenish bucket one from bucket two. You could even have more than two buckets. For example, you could set up a bucket for “now”, another one for “soon” and a third for “later.”

Unfortunately for those who like the sound of the bucket strategy, the TSP requires that withdrawals be taken proportionately between your TSP investments based on your account allocation. Let’s say that you are withdrawing $1,000 each month and that your account is evenly allocated between the five basic funds. $200 of each withdrawal would come from the G Fund, $200 from the F Fund, $200 from the C Fund, $200 from the S Fund and $200 from the I Fund. 

Even when the TSP Modernization Act was implemented, there was no change in the proportionality requirement as it applies to which funds you will withdraw from. If you wanted to follow a bucket strategy, your money would need to be somewhere other than the TSP (like an IRA).

Front-Loading Your TSP

What if you’re planning to separate from federal service in the middle of the year? Can you “front-load” your TSP? Yes you can.

Once you separate you cannot contribute to the TSP, so consider contributing enough so that you can reach the elective deferral amount ($20,500 in 2022) by the date of your separation. If you were leaving government service at the end of the 13th pay period, you would contribute (assuming you could afford to) $1,577 a pay period to the TSP to reach the elective deferral amount by the time you leave.

Agencies can request to have John Grobe, or another of Federal Career Experts' qualified instructors, deliver a retirement or transition seminar to their employees. FCE instructors are not financial advisers and will not sell or recommend financial products to class participants. Agency Benefits Officers can contact John Grobe at to discuss schedules and costs.

About the Author

John Grobe is President of Federal Career Experts, a firm that provides pre-retirement training and seminars to a wide variety of federal agencies. FCE’s instructors are all retired federal retirement specialists who educate class participants on the ins and outs of federal retirement and benefits; there is never an attempt to influence participants to invest a certain way, or to purchase any financial products. John and FCE specialize in retirement for special category employees, such as law enforcement officers.