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Similar to 401(k) plans, the U.S. Government contributes a matching contribution to the employee’s account which is a great tool for accumulating a larger account over their career. Also, the TSP allows for pre-tax contributions to reduce the participant’s taxable income while accommodating post-tax contributions to a Roth account for tax-free growth and withdrawals in retirement. Lastly, the contributions from the employee’s paycheck are performed by the employer and directly deposited into the TSP account of the individual. Little administrative time is required for the employee to contribute and receive reports on their account.

While the TSP has strong benefits during your working years, many retirees find it useful to roll their TSP balance into an IRA once they are ready to take distributions. The reasons for such a rollover are many. A few of the benefits of performing a rollover IRA from the TSP are that the retiree can choose from a larger number of investment options. The purposes for this benefit are that you would have greater diversification opportunities by including asset classes and investment types not offered in the TSP. Further, by rolling the TSP account to your IRA, it requires less management time and fewer accounts to review periodically.

IRAs provide more freedom on how and when you take withdrawals compared to the TSP’s limited distribution choices. Flexibility can help with planning for your taxes and income needs in retirement. A person controls the estate planning process better with an IRA and may have more options in naming and protecting beneficiaries. This would be a more tax efficient way of distributing the balance of the account to heirs.

One of the most important benefits of considering rolling over your TSP account to your IRA is that you may gain professional advice from a CERTIFIED FINANCIAL PLANNER^® practitioner who specializes in retirement planning and taxation. When your family experiences an unexpected and costly event, an experienced retirement planning advisor can make changes to your plan that will keep you on track toward your lifetime goals. Perhaps your risk tolerance has changed due to the event. A professional investment advisor can assist you with evaluation and rebalancing of your portfolio to provide you with greater confidence and comfort while in retirement.

The Thrift Savings Plan is an excellent tool for building retirement savings while you are working, thanks to its low costs and simplicity. But when it comes time to retire and start taking distributions, rolling over your TSP into an IRA can provide greater control, flexibility, and professional support.

Every investor’s situation is different, so it is wise to talk with a CERTIFIED FINANCIAL PLANNER^® professional before making a rollover decision. Still, for many retirees, moving funds from the TSP to an IRA is an important step in making the most of their hard-earned savings. Seek out a complimentary consultation with a retirement specialist today. Tomorrow will arrive before you realize it and you will be more prepared to meet the future with a plan in place. See you on the jogging trail!

REGISTERED PRINCIPAL SECURITIES OFFERED THROUGH CAMBRIDGE INVESTMENT RESEARCH, INC., A BROKER/DEALER, MEMBER FINRA/SIPC. JIMMY J. WILLIAMS IS AN INVESTMENT ADVISOR REPRESENTATIVE OF COMPASS CAPITAL MANAGEMENT LLC, A REGISTERED INVESTMENT ADVISOR. CAMBRIDGE AND COMPASS CAPITAL MANAGEMENT LLC ARE NOT AFFILIATED. 215 E. CHOCTAW, SUITE 101, MCALESTER, OK 74501. CAMBRIDGE DOES NOT OFFER LEGAL AND TAX ADVICE. PLEASE CONSULT YOUR LEGAL AND TAX ADVISOR FOR SPECIFIC ESTATE AND INCOME TAX PLANNING STRATEGIES. THE INFORMATION IN THIS ARTICLE IS FOR EDUCATIONAL PURPOSES ONLY AND IS NOT INTENDED TO BE TAX ADVICE. FURTHER, YOU SHOULD NOT RELY ON THIS INFORMATION TO MAKE INVESTMENT DECISIONS.