Q. I agree with you that the TSP is hard to beat when it comes to maintenance costs, etc. However, the TSP’s limited options when it comes to withdrawing the money don’t fit into my retirement plans. I’m considering using the TSP partial withdrawal option to roll over about half my TSP into a Vanguard IRA when I retire. At a later date, I’d use the full withdrawal option to move the rest of my money into the Vanguard IRA. That way I’d have some money readily available to me and I’d be leaving some in the TSP for as long as possible. Is there anything that would prevent me from taking this option? What are your thoughts on this strategy?
A. While this is possible, I think you should consider taking a single, partial lump sum to create an adequate cash reserve fund and then use fixed-amount monthly payments to maintain the balance. With a little planning, you should be able to minimize the probability that you will have to take that final, terminal withdrawal.