TSP vs. IRA withdrawal


Q. One of my concerns with respect to withdrawals from the TSP is the inability to choose the fund you are withdrawing from since any money you removed is taken from all current funds in the same percentage as they exist in the TSP account. Ideally I would like a few years’ buffer of expected expenses in the G fund with the bulk of my TSP in equities, so if the markets have a bad year or two I don’t have to lock in those losses and could draw strictly from the G fund until the markets recover. Will a typical IRA allow for such a setup where I could pick which funds to draw from? Is there another option for TSP I’m overlooking?

A. You don’t need to move to an IRA to accomplish what you’re trying to do. Just take your withdrawal and then rebalance your account to what it would have been if you could have targeted the withdrawal toward a specific fund or funds. The outcome will be the same. The idea that you are somehow locking in losses is nonsense.


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Mike Miles is a Certified Financial Planner licensee and principal adviser for Variplan LLC, an independent fiduciary in Vienna, Virginia. Email your financial questions to fedexperts@federaltimes.com and view his blog at money.federaltimes.com.

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