Many of the people we serve have contributed to the Thrift Savings Plan, which is more commonly known as the TSP.
Oftentimes when people are preparing to retire from Federal civilian service or the uniformed services, they are interested in using the money they have accumulated in their Thrift Savings Plan to develop an income and investment strategy that will help them meet their financial goals for retirement.
If you are already retired you can use form TSP-70 to request a direct transfer of your TSP to an IRA. Taxation of your account will depend on the type of money contained in your account and the type of account you are transferring the money to. Generally speaking if you have a TSP with pre-tax contributions, then in most cases we have assisted with, we have been able to transfer the TSP to a Traditional IRA without incurring any immediate tax consequences*.
*Tax and TSP rules are complex and you should consult with a tax adviser before making a transfer or distribution.
If you are over age 59.5 and still working you may be eligible for an Age-Based In-Service Withdrawal of your vested TSP balance. We have worked with many people who are within five years of retirement who use the Age-Based In-Service Withdrawal feature to transfer money from their TSP to a self directed IRA before they retire. Please remember that if you make an age-based withdrawal, then you lose the option of making a partial withdrawal from your account after you separate from service. To learn more about Age-Based In-Service Withdrawal click here.
By using a direct transfer of funds from the TSP to an IRA, you will have a lot more choices over the financial tools you can use to help you create your retirement plan. One of the many reasons to consider transferring money from your TSP to an IRA is to simplify and consolidate your accounts.