Q. I understand you’re a proponent of leaving your money in the TSP at retirement, mainly due to low cost. However, are there benefits to rolling it into an IRA? I’m thinking along the lines of inheritance for my beneficiaries. I thought I read once that the options for beneficiaries are more restrictive with TSP. What are the advantages and disadvantages of the two choices? I am a FERS retiree who is 62 years old.
A. An adviser who believes that the best reason to stay in the TSP is the low cost is out of touch, since you can closely replicate the TSP’s costs in an IRA if you’re diligent. The main reason I recommend that you stay in the TSP is the availability of the G-Fund. Of course, if you don’t know how to use it to your (or your client’s) best advantage, I guess that isn’t much of a reason. Your question about the best way to position your resources for your beneficiaries should be posed to an estate planning attorney that you have engaged to plan your estate. I can’t think of any good reason, off hand, that generally makes an IRA a better bet for your heirs. Any relative advantage would depend upon how you will manage the accounts in each scenario.
