Question 1
Dallen, love the videos and the help you provide. I plan on retiring next year at my MRA. I have a relatively small Roth IRA outside of the TSP and just started putting money into the ROTH TSP to start building more tax free money for later in life or for my heirs. My first Roth TSP contributions just went in this last pay period but when looking at my TSP account online, it does not distinguish between Traditional and Roth. I plan to transfer a good portion of my TSP over to an IRA upon retirement. I was thinking of leaving the ROTH TSP in the TSP until 72 and then rolling that over. How would I know how much of my money is traditional vs Roth when I want to move that money? Also it appears any interfund transfers apply equally to both accounts. Seems like this is another one of the negatives about the TSP. Thanks!
Answer 1
Congrats on getting started with Roth accounts!
Not being a federal employee myself, I can’t tell you exactly how to navigate TSP.gov in order to find the breakdown between your Traditional TSP and Roth TSP funds. However, It is always broken down on your quarterly statements so in the worst case you can always see it there.
The good news is that you can tell the TSP exactly what side (traditional or Roth) to take money from in retirement or when rolling money to an IRA.
And you are right that interfund transfers apply proportionally to your traditional TSP and your Roth TSP and there is no way to separate them in that way. If you want to invest these two accounts differently then you’d have to transfer your money to an IRA and Roth at retirement.
Question 2
I have contributed and grown a significant amount of money in my TSP throughout my career. I have been in the military about six years and have about $175,000 in my TSP. I am separating from the military in February. Can you advise on what I should do with that money? Love your videos!
Answer 2
There are usually 3 options for your TSP when you separate from service.
1st, you can leave your money in the TSP. This option is often the simplest and it allows you to continue using the funds that you have grown to understand and like.
2nd, you can roll your TSP into an IRA. There are many pros and cons between the TSP and an IRA and you can learn more about that here.
3rd, you can roll your TSP into your 401k or most other retirement plans from your new job. Before you do this you will want to make sure that the fees and fund options are reasonable in your 401k before you make the switch.
Question 3
I am 36 and recently left my federal job of 17 years. Since I am not yet close to retirement age and not planning on working for the federal government anymore what would you recommend for me to do with my FERS/TSP? Thank you for your time!
Answer 3
Refer to my response above about what to do with your TSP.
When you leave the government before you are eligible for retirement then you can keep your FERS contributions in the FERS system and draw a pension at a later date.
Note: You have to have at least 5 years of service to be eligible for a pension at any age.
If you have more than 5 but less than 10 years of service then you can start a deferred retirement at age 62.
If you have 10 or more years of service then you can start a pension as early as your Minimum Retirement Age.
However, the other option is to take a refund of your FERS contributions. If you take the refund then you will not be eligible for a pension later.
