401K rollover into TSP or Roth IRA?

[ShinobiBC]

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So, everything I have read so far concerns people moving their TSP into a private industry 401K. I guess I am doing things backwards by leaving private industry for government service.

My question is actually a solicitation for advice. Any opinions on whether I should (or even can) roll my current Vanguard 401K into TSP or into a Roth IRA? I am not sure what Roth IRAs have to offer over the TSP, but can't find information on rolling over a 401K into the TSP. :?ugh...

 

[rokid]

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Info from the TSP web site:

The TSP can accept funds that were distributed from a traditional IRA or an eligible employer plan (or its designated financial institution). Also, the money that you are transferring or rolling over must be considered an "eligible distribution" under the Internal Revenue Code. If you are considering making a transfer, you should check with the administrator of the plan from which you wish to transfer the money (or your tax advisor) to ensure that the funds are eligible for transfer or rollover.

Note: The TSP can only accept transfers that consist of before-tax money. The money will be subject to income tax when it is eventually paid to you from your TSP account.

 

[rokid]

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TSP pros:

1% fee for allfunds - including small cap and international.

TSP cons:

Limited investment choices - no value, growth, emerging market, or industryfunds

If it’s an option, you might want to consideropening a TSP account and keepingyour Vanguard 401K - assuming it has more choices or you're invested in fund types, e.g. emerging markets, not offered by TSP.

 

[Rolo]

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Question: Why do you want to roll your 401(k) into your TSP? What is compelling the change?

The chief disadvantage of doing this is that you lose flexibility by forfeiting the selections available in your 401(k) and limiting yourself to the TSP's five index funds.

 

[ShinobiBC]

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Rokid, thanks for the info. I had found that passage, but it seemed a little vague to me (especially when I was getting conflicting info from other people). I see your point about the TSP limitations and appreciate your quick feedback. I doubt I will rollover into the TSP now.

 

[rokid]

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You're welcome. Good luck and welcome to the federal service.