Question about withdrawing from TSP

[DARTIST]

What are the ramifications of rolling over TSP funds into an outside IRA. I was told by a financial advisor they could get a better return.
More specifically, what are the tax ramifications. I'd like feedback as to whether this a dumb idea.

Thanks

 

[Grits]

Check Birtchtree's thread. He's got some good info there he's posted previously.

 

[nasa1974]

DARTIST, If you're eligible to roll your TSP account into an IRA there should be no ramifications. The IRA would be treated just like your TSP account and you would be taxed only on the money taken out.
As far as a financial adviser saying he could get you a better return. That may or may not be true. Depends on how well you have managed your TSP account. My wife's financial adviser said he could get her a 5-7% return on average. Last year I finished at a 37.08% return. Trust me it was more luck than skill but over the last 10 years I averaged 13.62%. I had one really bad year, two mediocre and the rest where 14% or better. I learned from some very good people on this website. I think my wife's IRA made just over 12% last year.
The biggest difference between your TSP and an IRA is you should have more flexibility with an IRA. Which ever way you decide to go I hope the market is good to you.

 

[Meteorology]

DARTIST, If you're eligible to roll your TSP account into an IRA there should be no ramifications. The IRA would be treated just like your TSP account and you would be taxed only on the money taken out.
As far as a financial adviser saying he could get you a better return. That may or may not be true. Depends on how well you have managed your TSP account. My wife's financial adviser said he could get her a 5-7% return on average. Last year I finished at a 37.08% return. Trust me it was more luck than skill but over the last 10 years I averaged 13.62%. I had one really bad year, two mediocre and the rest where 14% or better. I learned from some very good people on this website. I think my wife's IRA made just over 12% last year.
The biggest difference between your TSP and an IRA is you should have more flexibility with an IRA. Which ever way you decide to go I hope the market is good to you.

Yes, there is much more flexibility with a IRA. For example: ownership of some types of precious metals and coins are permitted as well as some other assets. If you are concerned about the future of the dollar this is one way to diversify without tax implications.

 

[clester]

What are the ramifications of rolling over TSP funds into an outside IRA. I was told by a financial advisor they could get a better return.
More specifically, what are the tax ramifications. I'd like feedback as to whether this a dumb idea.

Thanks

Watch out for higher fees. TSP has the lowest fees. It has the G fund which has no equal. You won't lose money! (Unless the government fails). I don't like giving control of my money to someone else. You should handle it yourself. I left mine in TSP after retirement and I'm happy with the choice so far.

 

[Kaufmanrider]

I rolled mine a few weeks ago. Diversification was the key, individual stocks, Stock ETFs, BOND ETFs, Commodity ETF's, etc. The bulk of my money will be a buy and hold with about 20% used for market timing. Many of the ETF's I use are Schwab Funds which have low fees. If you roll into Vanguard, they have low fee ETF's also. I also bought a good number of dividend paying stocks. I was given 150 commission free trades over the next 6 months.

TSP did the roll-over quickly with no problems.

 

[burrocrat]

I rolled mine a few weeks ago. Diversification was the key, individual stocks, Stock ETFs, BOND ETFs, Commodity ETF's, etc. The bulk of my money will be a buy and hold with about 20% used for market timing. Many of the ETF's I use are Schwab Funds which have low fees. If you roll into Vanguard, they have low fee ETF's also. I also bought a good number of dividend paying stocks. I was given 150 commission free trades over the next 6 months.

TSP did the roll-over quickly with no problems.

schwab is the hot ticket, i only put 5% in the tsp for the free 5% match and the rest goes to schwab. other companies have them too, but their in house etf's trade real time commission free and you can set limit orders or stops. i have 4 accounts with schwab: investor checking (cash emergency fund), regular brokerage, roth ira, and education ira with my son as beneficiary. every 2 weeks on payday i fund auto-fund scwhab with enough to max out edu ira over 26 pay periods and the same amount which split equally among 'my' 3 accounts. once per month i buy as many shares as i can of whichever fund in my allocation has underperformed over the last month. i do this until i reach a minimum number of shares for buy and hold. when all 5 funds hit my base allocation i swing trade the extra shares. when i make more money i increase my base allocation and go back to buying cheap shares until new targets are hit and hot trade the excess. i would like to add a regular ira for the tax benefits too, but right now the liquidity of checking and brokerage accounts is more important. also as salary increases i plan to up the contributions to roth and the other accounts until i max out annual contributions, but that will take a while.

what schwab etf's did you decide on? i have mine split basically along the lines of 5 funds i consider proxies for tsp G F C S I like this:

reg brokerage:
G = schr, barclay's 3-10 year u.s. treasuries
F = schz, barclay's u.s. agg bonds
C = schx, dow jones large cap (1-750) market cap
S = scha, dow jones small cap (751-2500) market cap
I = schf, FTSE developed ex-us
after reaching minimum buy and hold allocations i swing trade excess shares and sweep cash among the 5 funds.

education ira: i swapped a couple of funds and this is a pure buy and hold account with an 8 year horizon investment, plus another 4-5 years for withdrawal (or if my kid is too dumb to go to college or finds a rich sugar mama then i suppose i could just go back and get that useless art degree i always wanted):
schp u.s. TIPS treasury inflation protected bonds instead of schr
schh REIT real estate invesment trust instead of schz
schd dow jones u.s. dividend 100 index

roth ira: again minimum share allocation and swing trade the excess, same as edu ira but switched to foreign emerging markets:
sche FTSE emerging markets instead of schf.

they all perform relatively similar with minor variations between real estate vs. corporate bonds and developed vs. emerging foreign markets. i give up some preferential tax treatment now in favor of more choices for diversification, real time unlimited free trades, flexible limit/stop capabilities, and liquidity without tax consequnces for withdrawal if neccesary. plus greg long and geitner/lew can't borrow my money to stopgap their broken budget. i'm winning!

in the future i plan to add regular ira to get some extra tax advantage now and increase contributions as career advancement allows until i max roth and regular ira's. and add individual equities or other sectors with commissiom fees when my volume makes it more cost effective. i love to log into the schwab website and they have this cool streetsmart trading platform. i hate logging into the clunky tsp website.

i also plan to hit the lottery to make this entire exercise moot and hire some hot chick to manage my money and drive my new rock star party bus, but until then i'm pretty happy with this arrangement.

 

[Frixxxx]

i also plan to hit the lottery to make this entire exercise moot and hire some hot chick to manage my money and drive my new rock star party bus, but until then i'm pretty happy with this arrangement.

Um, dude....you can't do this.....Everyone knows she will embezzle your money, steal the bus and drive off with a real rock star.....But hey, if that's how you want your last chapter of the biography to read....Have at it! :toung:

 

[burrocrat]

Um, dude....you can't do this.....Everyone knows she will embezzle your money, steal the bus and drive off with a real rock star.....But hey, if that's how you want your last chapter of the biography to read....Have at it! :toung:

oh no, i don't mean get married to her, i'm not making that mistake again. except it was a travel trailer not bus and my neighbor. but the joke's on them, i was broke to begin with so there was nothing to embezzle and now he's stuck with her, ha ha!

i plan to solve the loyalty and trust issue with technology.

they already make a mind control bra that i'm working on a smart phone hack for: http://www.tsptalk.com/mb/strange-news/17703-weird-news.html#post440174

and i'm on the lookout for a gps shock collar disguised as a necklace, like those kind they have for dogs to keep them in the yard without unsightly razor wire fences and stop them from chasing the mail man.

those are just temporary solutions though until they perfect the whole programmable cyborg thing. i'm thinking something along the lines of 7 of 9 from star trek or else kelly lebrock from weird science as a starter model.

 

[Kaufmanrider]

schwab is the hot ticket,

what schwab etf's did you decide on? i have mine split basically along the lines of 5 funds i consider proxies for tsp G F C S I like this:

reg brokerage:
G = schr, barclay's 3-10 year u.s. treasuries
F = schz, barclay's u.s. agg bonds
C = schx, dow jones large cap (1-750) market cap
S = scha, dow jones small cap (751-2500) market cap
I = schf, FTSE developed ex-us
after reaching minimum buy and hold allocations i swing trade excess shares and sweep cash among the 5 funds.

education ira: i swapped a couple of funds and this is a pure buy and hold account with an 8 year horizon investment, plus another 4-5 years for withdrawal (or if my kid is too dumb to go to college or finds a rich sugar mama then i suppose i could just go back and get that useless art degree i always wanted):
schp u.s. TIPS treasury inflation protected bonds instead of schr
schh REIT real estate invesment trust instead of schz
schd dow jones u.s. dividend 100 index

burrocrat, I am doing the Paul Merriman Lazy portfolio.

SCHWAB TAX-DEFERRED ETF PORTFOLIOS - Paul Merriman

He has an Aggressive 100% stock and Moderate 60/40 stock/bond. I went Moderate Aggressive 80/20.

 

[konakathy]

What are the ramifications of rolling over TSP funds into an outside IRA. I was told by a financial advisor they could get a better return.
More specifically, what are the tax ramifications. I'd like feedback as to whether this a dumb idea.

Thanks

Here is a link with basic tips on what to consider before rolling over your TSP account to an IRA. The article might answer a few questions for you. Good Luck.

TSP Rollovers to an IRA: 10 Tips that TSP Participants Should Consider

 

[nasa1974]

oh no, i don't mean get married to her, i'm not making that mistake again. except it was a travel trailer not bus and my neighbor. but the joke's on them, i was broke to begin with so there was nothing to embezzle and now he's stuck with her, ha ha!

i plan to solve the loyalty and trust issue with technology.

they already make a mind control bra that i'm working on a smart phone hack for: http://www.tsptalk.com/mb/strange-news/17703-weird-news.html#post440174

and i'm on the lookout for a gps shock collar disguised as a necklace, like those kind they have for dogs to keep them in the yard without unsightly razor wire fences and stop them from chasing the mail man.

those are just temporary solutions though until they perfect the whole programmable cyborg thing. i'm thinking something along the lines of 7 of 9 from star trek or else kelly lebrock from weird science as a starter model.

Burro, great plan but you know what's going to happen. You will wake up one morning with the necklace around your neck and wondering why you are wearing a bra. Good luck with the rock star bus it sounds like fun.

 

[RazorCat]

I completed a partial withdrawal from TSP to an IRA last week. Very seamless, and surprisingly quick transaction for something TSP was involved in. I requested a direct withdrawal (straight from TSP to a traditional IRA) of just over 40% of my TSP. On or about week 6 of retirement I logged into my online TSP account and was able to access the TSP-77 fillable PDF for a Partial Withdrawal. You partially fill it out, print it out, and then there are certain areas that require a notary before you fax it to TSP for processing. Here are a few tips about the whole withdrawal process I'll pass on to those that haven't been through it. (Login to account->Withdrawals->Full or Partial Withdrawal options will be available for selection if TSP has received official notification of your separation from service).

1. Upon your separation from service you won't receive any notification from TSP that your eligible to process a full or partial withdrawal from your account. I started checking at 4 weeks from my official retirement date. Access was granted at approx. 6 weeks.
2. Once you fill out, print, and notarize the TSP-77 form, you fax it directly to TSP. You'll receive no notification that it was received, although you can call them to verify it was received and is being processed. I called them the next day and they verified it was received and was being processed. I was informed it would take 3-5 business days for processing, and an additional 8-10 days for funds from my TSP account to be transferred to my IRA (which was already established and waiting). The whole process took 11 days to complete.
3. You will receive notification from TSP via mail within 2-3 days of the transaction being completed. (Notification is always "after the fact" where the government is involved).
4. Within about the same timeframe you should receive your Claim number and temporary password for your OPM Services Online account (if your separation is due to retirement).

Things are back to normal now. The money in my IRA is set up to provide a permanent income stream for years to come. I'm invested in shares (at a set dollar amount per share) with a company I've done business with, and make excellent money with, for years.
The dividends on the shares they pay into my account each month can be re-directed to other investments as I see fit. They pay all IRA fees as part of the deal. The remainder in my TSP is moved among S, C, F, and G as appropriate.
Life is good.

 

[nnuut]

Enjoy your retirement, you worked for it!

 

[RazorCat]

Enjoy your retirement, you worked for it!

Thank You. Loving it so far. My wife and I started planning 2 years prior for the first few lean (interim payment) months, and we fortunately ended up well ahead of what was required. It certainly takes the worry out of it when you have finances set aside specifically to get thru until the full checks start to roll in. Our financial strategy for the past 30+ years was for her to handle the "short term" money matters while I took care of "long term" issues like preparing for retirement. It turned to be an excellent strategy.
Time for both of us to enjoy it now.