Q: I plan to retire next year at age 62 and my financial adviser suggests moving my Thrift Savings Plan money into American Funds or a similar funds manager because I will have very limited flexibility drawing money from TSP if I stay there. My problem is that the sales charge will take a good chunk of money to do that, and the TSP expenses are low. I have money in a 401K, which is currently invested in staggered CDs, and I thought I would move it into the TSP instead of transferring the money out of TSP. What are your thoughts?
A: When in doubt — and in most cases, in general — I recommend that you maximize the amount of your retirement savings in the TSP. In many cases, you will likely be better off taking monthly withdrawals that you don’t need from the TSP and then reinvesting the after-tax proceeds in a taxable account, than moving the money to a higher-cost alternative.