Please keep in mind that it is impossible to give perfect advice based on the amount of information you have provided. Since you have just retired, this would be a great time to visit with a financial planner to go over your portfolio and investments to give you an idea of how long your investments will last and if there is a more optimal way to invest your funds. I recommend visiting with a fee only financial planner, as they have less incentive to “sell” you funds that earn them a commission. You can read more about finding a financial advisor, and interviewing a financial planner.

Regarding rolling your funds over into an IRA, this will depend upon your investment goals. If you want more control over your investments, then an IRA is the way to go. If you want the lowest risk and lowest fees, then the G Fund is about as stable and low cost as you can get. The question regarding a Roth or Traditional IRA is best determined first by deciding if you should roll your TSP into an IRA, then looking at your total financial portfolio to determine how most of your investments are taxed, when you will need the money, and other factors. This is an advanced topic, and one you should take to a professional financial advisor if you decide to roll your TSP into an IRA.

I’m 60 yrs old and just retired from federal service. I currently have some money saved on my TSP and is currently on “G” Fund. I would still like to have the money earn without envolving too much risk. What’s the best thing for me to do with the money: Leave it there or roll it over to an IRA. If it is the IRA, which one, Roth or traditional.

No problem. Like I said, I just learned it myself. It’s good to know about this loophole, especially for people who leave the service but still want to take advantage of the extremely low costs in the TSP funds.

I probably wasn’t clear in the article, but I was referring to making new contributions. For example, I still have my TSP, but I cannot make contributions to the account with money earned elsewhere. Thanks for the comment!

We actually CAN contribute to our TSP after leaving the military. I recently learn how to do so myself, so I’m not bragging, just providing additional info.

To do so, the money must be considered an “eligible rollover distribution” for Federal income tax purposes. In other words, if we contribute to a traditional IRA during a year, file taxes, and wait to the money to clear as being eligible for rollover, we can sink this money into our TSP.

This info can be found in the “Summary of the Thrift Savings Plan” August 2010 newsletter, pg 7.

Why would we do so? Well, I’d gladly pay only .028% on $16,500 for the next twenty years as opposed to 0.82% for even the least expensive mutual funds.

Romeo

Then think about what would happen in the case of a divorce (I’m not implying anything for your situation, but that is the reality of many marriages nowadays)… How would the money be split? What if there was an agreement that one spouse would make all the retirement contributions from his/her check while the couple lived on the other check? It would work great until there was a need to split the money later.

I think it would just get to complicated.

“No matching funds for military. Unless you are civil service, you do not get matching funds. In that case, it is usually better to max out your Roth IRA before contributing to the TSP.”

There is some talk about altering the 20 yr pension for matching contributions. This is a poor way to implement the change. The government should keep the system the way it is and let the “market timers” make up the difference in annual returns