Q. I plan to retire under FERS in three years at age 65 with 10 years of federal service. My TSP balance is $130,000. I also have a rollover IRA with our financial adviser from a past employer with a value of $150,000. Would it make sense to roll over my IRA into a TSP now? I’m paying a 1.25 percent annual management fee on the $150,000 and earning about 4 percent annually. A steady 3-4 percent return would be my goal within TSP, as I am getting close to retirement. Would the age-appropriate L Fund be my best bet?
A. A percentage of 1.25 in management expenses is TOO HIGH! You should not spend more than 1.0 percent per year on all of your investment costs combined, including management, analysis, advice, transaction, administrative and sales costs. You should move your IRA money to your TSP account now. If you don’t know how best to invest the money after it’s there, I suggest that you use the L Fund that most closely corresponds to your life expectancy.