Q: I will be 70 in February and realize I have until April 2012 to make
my decision about how to distribute my funds. But I am doing my
best trying to make a good decision. I am a CSRS retiree,
single, no dependents, and have slightly less than $100,000, so not a
huge amount. I spoke with a bank, and their advice was to withdraw
the whole sum and roll it over into an IRA, which would be a Mutual
Fund with a management fee of 1.6 percent. My thinking is that it
would be better to take a minimum distribution, or to take a $500 or
$600 set-amount withdrawal each month, and leave the money in the TSP
program until it is used up. I have gone on the government calculators and worked up the amounts and years for each of those sums. I don’t like
the idea of paying the investment fee of 1.6 percent (probably about
$1,500 per year). People have advised me against taking out an
annuity, which would leave no money for heirs in case of my early
death, but it also sounds like a good option for me.
A: Asking your bank what to do with your TSP balance is like asking many car salesmen what to do with your TSP balance, only many bankers are greedier and not quite as ethical. The “advice” you were given was clearly designed to further the bank’s interests at the expense of yours. Shameful. Leave your money in the TSP, invest it in the L Income fund and take your withdrawals.