Q: I am a 59-year-old Federal Employees Retirement System employee and have 35 years of service. I am considering retirement next year after reaching my 36th year. I would like to know my options concerning the Thrift Savings Plan. The questions I have deal with both leaving the funds in the TSP and moving them to another form of retirement account, which would not result in an immediate tax liability. Could you please explain the options available and what the benefits are to each?
A: You may leave your money in the TSP or roll the balance over to any IRA, or some combination of both. The primary advantage of leaving the money in the TSP is low cost, which is a BIG advantage. The reasons that people consider leaving the TSP are too numerous to explore here, but it’s enough to say that the vast majority of them are bad. If you’re considering leaving the TSP, I’d be happy to comment on the specific rationale that is motivating you to do so.