TSP: Look before you leave

With a balance of nearly $600 billion, the federal Thrift Savings Plan is equal to the combined gross domestic products of Portugal, Denmark and Iceland. And a lot of people would like a piece of the action in managing the investments of federal workers after they retire.

In fact slightly more than half of all TSP investors put some or in most cases all of their retirement nest egg in vehicles outside of the TSP. Despite the TSP’s money-saving low administrative fees many retirees want more investment options and also more freedom to get at their money when they want and need it. But all that is about to change starting in September.

Some of the changes might tempt ex-TSP investors to come back into the fold. But if they completely closed their accounts they can’t return. However, those who left several hundred dollars in their TSP accounts will be able to return to the TSP this fall when:

  • Participants will have the option to take monthly, quarterly and annual installment payments.
  • TSP holders will have the ability to take unlimited post-separation, partial withdrawals.
  • TSP holders will have the ability to take partial withdrawals and installment payments simultaneously.
  • TSP holders will have the ability to chose the source with withdrawals (fund or funds) including both tradition or Roth.

Or both — under current rules someone with investments in several funds must take equal withdrawals from each of those funds.

And there’s a lot more, but only if they still have TSP accounts. Those who closed them completely will not be able to return to the new, improved TSP and its more flexibility withdrawal options.

So for people planning to leave government before the changes take place it might be wise to study up on them before putting all of their TSP investments into some outside option.

When is the new TSP withdrawal option package going to take place, and what will it look like?

Listen to our Your Turn radio show this Wednesday at 10 a.m. EDT when Federal News Network’s Nicole Ogrysko will talk about the new withdrawal options and what she says are the four other things you should watch from the TSP in 2019.

Meantime, if you are retiring or leaving government early and want to move your TSP money elsewhere, consider leaving at least the minimum $200 in your account in case you might want to come back some day. Because you definitely might.

Nearly Useless Factoid

By Amelia Brust

Mountain Dew was invented in Tennessee as a mixer for whiskey in the 1940s, its name being a 19th-century slang term for moonshine. The Tip Corporation of Marion, Virginia, bought the rights to Mountain Dew and revised the flavor in 1961, before PepsiCo bought Tip Corporation in 1964.

Source: Wikipedia

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