TSP to Vanguard?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
tompillion
Posts: 7
Joined: Sat Jan 09, 2016 2:45 pm

TSP to Vanguard?

Post by tompillion » Fri May 13, 2016 3:04 pm

I retired two years ago from civil service, and have been debating moving my TSP to Vanguard, since I can no longer contribute to the TSP. I am comfortable with medium risk, and for the past 5-10 years I have had the following asset allocation for my existing funds, based on the recommendation of a local advisor at my credit union.
C - 34%
F - 38%
S - 24%
I - 4%

I do not need income at this time, but will be subject to the RMD's in about a year. I have talked to Vanguard and have had preliminary discussions with a PAS advisor. I told him I am comfortable with having a 60/40 or 50/50 split, and he offered to set up a portfolio and guide me because I am a novice at investing. My question is, recognizing that I will be paying more in fees with VG than TSP, will a designed Vanguard portfolio using Admiralty shares and PAS benefit me more than just keeping my TSP where it is with the existing asset allocation?

Thx.

retiredjg
Posts: 30347
Joined: Thu Jan 10, 2008 12:56 pm

Re: TSP to Vanguard?

Post by retiredjg » Fri May 13, 2016 5:28 pm

There are many separate questions in your post.

Is there a good reason to move from the TSP to Vanguard? I don't see one. Do you?

If you move from the TSP to Vanguard, do you need to use the Advisor Service? I don't see why you would. You've been managing just fine for the last 5 or 10 years, why can't you do the same now but do it at Vanguard?

And even if you don't want to manage it yourself, you could just put the money into a LifeStrategy Fund and let Vanguard manage it but not pay the .3% advisor fee. Investing at Vanguard does not require you to participate in their advising program.

It is not possible to know if using Vanguard and PAS will benefit you more because your current allocation is different from what they would put you into. Yes, the stock to bond ratio may be very close to the same, but they would put you into more international (40% of your stocks as opposed to what you have now which is about 6% of your stocks). They would also put you into a bit of international bonds. So trying to compare is a little bit of comparing apples and oranges. No way to know ahead of time which would "do better".

It might be helpful if you tell us exactly why you are considering the switch. What you have currently is not broke, so no fix is needed. But you may have other concerns. If you tell us what they are, it would be easier to make suggestions.

mhalley
Posts: 5069
Joined: Tue Nov 20, 2007 6:02 am

Re: TSP to Vanguard?

Post by mhalley » Fri May 13, 2016 5:40 pm

Most bogleheads would envy having a TSP account. I can't think of any compelling reason to move it anywhere.

123
Posts: 2404
Joined: Fri Oct 12, 2012 3:55 pm

Re: TSP to Vanguard?

Post by 123 » Fri May 13, 2016 5:46 pm

I wish I had a TSP. A TSP account is probably more desirable for retirement savings then a Vanguard account if your interest is an index fund approach.
The closest helping hand is at the end of your own arm.

Ybsybs
Posts: 338
Joined: Thu Aug 28, 2014 4:28 pm

Re: TSP to Vanguard?

Post by Ybsybs » Fri May 13, 2016 5:53 pm

tompillion wrote:My question is, recognizing that I will be paying more in fees with VG than TSP, will a designed Vanguard portfolio using Admiralty shares and PAS benefit me more than just keeping my TSP where it is with the existing asset allocation?


Not at this time. The advantages of rolling TSP into an IRA are greater options for your withdrawals (but you've said you don't need income yet) and easier transfer of funds within a tax-advantaged account to a non-spouse beneficiary (but you haven't mentioned estate planning among your current concerns).

Ybsybs
Posts: 338
Joined: Thu Aug 28, 2014 4:28 pm

Re: TSP to Vanguard?

Post by Ybsybs » Fri May 13, 2016 5:55 pm

tompillion wrote:C - 34%
F - 38%
S - 24%
I - 4%


Is there a reason you've chosen not to use the G Fund?

sumi
Posts: 19
Joined: Fri Mar 16, 2012 8:12 pm

Re: TSP to Vanguard?

Post by sumi » Fri May 13, 2016 5:56 pm

My husband left civil service 14 years ago. We contribute to other IRAs and roll them into the TSP.

Ybsybs
Posts: 338
Joined: Thu Aug 28, 2014 4:28 pm

Re: TSP to Vanguard?

Post by Ybsybs » Fri May 13, 2016 5:56 pm

sumi wrote:We contribute to other IRAs and roll them into the TSP.


Sumi - Have you been able to roll Roth IRAs into TSP?

User avatar
grabiner
Advisory Board
Posts: 20681
Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: TSP to Vanguard?

Post by grabiner » Fri May 13, 2016 8:34 pm

The main reason to keep the TSP is the G fund. The main reason to have money at Vanguard is the options that are not available in the TSP, such as a broader-based international fund (I fund is large-cap developed markets only, while Total International includes emerging markets and small-cap) and other options such as REITs.

Therefore, it makes sense to keep enough in the TSP to hold your G fund needs; this may even be your whole bond allocation, as the G fund is better than any bond fund Vanguard offers. Conversely, you should keep enough outside the TSP to hold your needs for things not offered in the TSP. For the rest of the money, it could be in either account, although keeping the C and S funds in the TSP has the advantage that you can move the money to the G fund later as your target bond allocation increases.
David Grabiner

navyasw02
Posts: 208
Joined: Wed Nov 19, 2014 11:38 pm

Re: TSP to Vanguard?

Post by navyasw02 » Fri May 13, 2016 8:39 pm

grabiner wrote:The main reason to keep the TSP is the G fund. The main reason to have money at Vanguard is the options that are not available in the TSP, such as a broader-based international fund (I fund is large-cap developed markets only, while Total International includes emerging markets and small-cap) and other options such as REITs.

Therefore, it makes sense to keep enough in the TSP to hold your G fund needs; this may even be your whole bond allocation, as the G fund is better than any bond fund Vanguard offers. Conversely, you should keep enough outside the TSP to hold your needs for things not offered in the TSP. For the rest of the money, it could be in either account, although keeping the C and S funds in the TSP has the advantage that you can move the money to the G fund later as your target bond allocation increases.


^^^This is the reason to keep TSP. I have a friend who shifted to G during that week the market crumbled in 2008, then moved back when the dust settled. Not only will you not lose money, but you have no transaction costs when you shift funds in case of a severe downturn.

ChrisC
Posts: 545
Joined: Tue Jun 19, 2012 9:10 am
Location: North Carolina

Re: TSP to Vanguard?

Post by ChrisC » Fri May 13, 2016 8:40 pm

Ybsybs wrote:
sumi wrote:We contribute to other IRAs and roll them into the TSP.


Sumi - Have you been able to roll Roth IRAs into TSP?


Firstly, notwithstanding lower fund expenses with TSP, why would anyone transfer/rollover a Roth IRA, with no forced RMDs, into a Roth TSP or Roth 401K, which have RMD requirements?

Secondly, TSP does not allow a Roth IRA to be rolled into the Roth TSP. From the TSP website:

"The TSP will accept into the Roth balance of your TSP account:
only transfers (i.e., direct rollovers) of qualified and non-qualified Roth distributions from Roth 401(k)s, Roth 403(b)s, and Roth 457(b)s. If you don't already have a Roth balance in your existing TSP account, the transfer will create one.

The TSP will not accept Roth rollovers that have already been paid to you and it will not accept transfers or rollovers from Roth IRAs."
https://www.tsp.gov/PlanParticipation/E ... ility.html

Dontridetheindexdown
Posts: 56
Joined: Sat Feb 14, 2015 10:08 pm

Re: TSP to Vanguard?

Post by Dontridetheindexdown » Fri May 13, 2016 8:43 pm

Keep the TSP.

They have the best RMD system, bar none.

You can wait until the year after you turn 70 1/2, and the TSP monthly payments meet the RMD requirement.

Even better, the TSP actuarial table is tilted in your favor.

The TSP is like a 401K or an IRA, but better.

We have transferred significant amounts from 401Ks and IRAs into the TSP.

As Grabiner noted, the G fund is unique.

There is no better vehicle for stable assets than the TSP G Fund.

DO NOT, UNDER ANY CIRCUMSTANCES, LEAVE THE TSP!

Just my opinion, for what it's worth.

User avatar
grabiner
Advisory Board
Posts: 20681
Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: TSP to Vanguard?

Post by grabiner » Fri May 13, 2016 9:10 pm

navyasw02 wrote:
grabiner wrote:The main reason to keep the TSP is the G fund. The main reason to have money at Vanguard is the options that are not available in the TSP, such as a broader-based international fund (I fund is large-cap developed markets only, while Total International includes emerging markets and small-cap) and other options such as REITs.

Therefore, it makes sense to keep enough in the TSP to hold your G fund needs; this may even be your whole bond allocation, as the G fund is better than any bond fund Vanguard offers. Conversely, you should keep enough outside the TSP to hold your needs for things not offered in the TSP. For the rest of the money, it could be in either account, although keeping the C and S funds in the TSP has the advantage that you can move the money to the G fund later as your target bond allocation increases.


^^^This is the reason to keep TSP. I have a friend who shifted to G during that week the market crumbled in 2008, then moved back when the dust settled. Not only will you not lose money, but you have no transaction costs when you shift funds in case of a severe downturn.


No, this is not the reason to keep the TSP. You could have shifted to a bond fund in an IRA just as well to reduce your risk. And most market timers who pulled out of the market when it collapsed in 2008 missed a large part of the recovery as well; they might have been better off staying the course.

The reason to hold the G fund is that it has no risk. Therefore, you can hold the same amount of bonds with the G fund and have a less risky portfolio than a conventional portfolio; alternatively, you can hold slightly less in bonds with the G fund and have the same risk level but higher expected returns.
David Grabiner

tompillion
Posts: 7
Joined: Sat Jan 09, 2016 2:45 pm

Re: TSP to Vanguard?

Post by tompillion » Fri May 13, 2016 11:24 pm

Thanks to all for your timely and helpful responses. I am relatively new to the forum and this is my first posting. Not sure how to reply to your individual responses, so here is a general comment. I joined TSP in 1989 and, with no experience or knowledge, I chose a portfolio that was about 90% G Fund. After a couple of years and having compared results with co-workers, I found my growth to be almost stagnant compared to theirs. A senior co-worker told me that, because I had many years to go before retirement, I could afford to take more risk in order to get better returns. So, I changed to almost 90% C Fund and experienced some very good growth. In 2008, due to the market downturn, I got cold feet and shifted to my current mix. I avoided G fund because I was still a few years from retirement and hadn't been impressed with its previous track record of returns. I retired in 2014 with no real investment knowledge and a somewhat arbitrary TSP portfolio mix. I had been listening on the radio to Rick Edelman stress the need for proper diversification under the auspices of a "qualified fee-based planner." I contacted his office, met with a rep, and almost signed on with him until I calculated how much I would be paying in fees. I put everything on hold and investigated other options, including Vanguard, Rick Ferri and Dave Ramsey. I concluded that, with Vanguard or Ferri, I could get the diversification recommended by Edelman for a much more reasonable fee. But then I wondered, would a diversified portfolio with Vanguard be better than what I already have with TSP? Hence, my initial posting today. Are the funds VG uses in their portfolios better, and if I stay with TSP, how do I know I have the right asset allocation? In short, I know enough to be dangerous, but not enough to understand how to maximize my investments and move forward.

User avatar
Jerry55
Posts: 524
Joined: Tue Jan 27, 2015 1:56 am
Location: That Toddlin' Town

Re: TSP to Vanguard?

Post by Jerry55 » Fri May 13, 2016 11:26 pm

tompillion wrote:I retired two years ago from civil service, and have been debating moving my TSP to Vanguard, since I can no longer contribute to the TSP.


At first, I thought like you, but decided to wait and figure it all out, and I'm glad I did.

I retired CSRS, and opened a Roth IRA w/Vanguard back in Mar. 2012, and thought I'd roll my TSP as well, but think about it.....

The G fund is the ONLY Bond fund that is guaranteed to never lose money. How many Bond funds can say that ?

Then, there's the L Income fund. The G Fund changes it's rate every month or so, and provides intermediate term returns.

I'd have to agree with the above posters to NOT transfer the TSP, but if you do, Leave enough $$$ there so that if things get

rough, you can transfer all of your cash back into the TSP. Once you close it....You will NEVER be able to open it again.

Don't lose that option...
Retired 12/19/2012 @ age 57 | Good Bye Tension, Hello Pension !!!

retiredjg
Posts: 30347
Joined: Thu Jan 10, 2008 12:56 pm

Re: TSP to Vanguard?

Post by retiredjg » Sat May 14, 2016 6:33 am

tompillion wrote:But then I wondered, would a diversified portfolio with Vanguard be better than what I already have with TSP?

Not really.

The one difference as noted above is that Vanguard's International fund contains emerging markets (markets of developing countries - think Brazil, Russia, India and China as opposed to developed countries like much of Europe, Asia, Australia and Canada). You don't have this in the TSP. Other than that, your US stocks and the F Fund are essentially identical to what you might choose at Vanguard, with the TSP being a little lower cost.

If you were to add emerging markets, it would be a very small portion of your portfolio anyway. There is no way to know if the portfolio would do better or not. It might do a little better. It might do a little worse. Chances are, the overall portfolio would do exactly the same.

If you want, you could maximize your diversification in the TSP by increasing your International allocation. As I mentioned above, what you have now is low. Many people are not concerned with this. In fact Jack Bogle believes that holding international stocks is not important because US companies have such a large international presence.

The easiest thing for you to do (if you do anything at all) is just move your allocation to the L fund that is about 60/40 or 50/50 and forget about it for a year or two. This would give you a little more international exposure and also give you some G Fund in addition to the F Fund. Every two years or so, check the ratios of the fund you choose. If it has migrated toward more bonds than you want, do an exchange into the next younger fund and leave it for another two or three years and check again.

Ybsybs
Posts: 338
Joined: Thu Aug 28, 2014 4:28 pm

Re: TSP to Vanguard?

Post by Ybsybs » Sat May 14, 2016 12:08 pm

tompillion wrote:


Tompillion - TSP's Lifecycle Funds could be a great fit for you. https://www.tsp.gov/InvestmentFunds/Fun ... index.html If you weren't already aware of them, please follow the link. Good luck.

Buford T Justiice
Posts: 21
Joined: Thu Jan 07, 2016 4:43 pm

Re: TSP to Vanguard?

Post by Buford T Justiice » Sat May 14, 2016 5:29 pm

The only downside of the TSP is if you do not have a spouse, and die. Your beneficiaries have to pickup their entire TSP inheritance in one lump sum; without the benefit of taking yearly RMDs.

User avatar
abuss368
Posts: 11564
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!

Re: TSP to Vanguard?

Post by abuss368 » Sat May 14, 2016 6:13 pm

In my opinion, moving our investment portfolio to Vanguard was the best financial decision we ever made.

Thank you Jack Bogle!
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

User avatar
LAlearning
Posts: 1365
Joined: Wed May 09, 2012 12:26 pm
Location: Los Angeles

Re: TSP to Vanguard?

Post by LAlearning » Sat May 14, 2016 6:18 pm

abuss368 wrote:In my opinion, moving our investment portfolio to Vanguard was the best financial decision we ever made.

Thank you Jack Bogle!


Yea, but not from the TSP.
I know nothing!

User avatar
abuss368
Posts: 11564
Joined: Mon Aug 03, 2009 2:33 pm
Location: Where the water is warm, the drinks are cold, and I don't know the names of the players!

Re: TSP to Vanguard?

Post by abuss368 » Sat May 14, 2016 6:35 pm

LAlearning wrote:
abuss368 wrote:In my opinion, moving our investment portfolio to Vanguard was the best financial decision we ever made.

Thank you Jack Bogle!


Yea, but not from the TSP.


Hi LAlearning,

I am surprised that you would know where we transferred from. In any event it was a wise decision to move to Vanguard.
John C. Bogle: "You simply do not need to put your money into 8 different mutual funds!" | | Disclosure: Three Fund Portfolio + U.S. & International REITs

Swansea
Posts: 446
Joined: Sat Feb 13, 2016 5:16 am

Re: TSP to Vanguard?

Post by Swansea » Sun May 15, 2016 1:45 pm

I rolled my monies from TSP to Vanguard as I don't mind paying a bit more for better service.

delamer
Posts: 2905
Joined: Tue Feb 08, 2011 6:13 pm

Re: TSP to Vanguard?

Post by delamer » Sun May 15, 2016 1:56 pm

Go to the wiki, and read the section on lazy portfolios. You will find that you can replicate most of them in the TSP.

As long as you feel that you can implement one of them on your own and stay the course when the markets inevitably slide one day, stick with the TSP.

User avatar
Jerry55
Posts: 524
Joined: Tue Jan 27, 2015 1:56 am
Location: That Toddlin' Town

Re: TSP to Vanguard?

Post by Jerry55 » Mon May 16, 2016 8:26 pm

Buford T Justiice wrote:The only downside of the TSP is if you do not have a spouse, and die. Your beneficiaries have to pickup their entire TSP inheritance in one lump sum; without the benefit of taking yearly RMDs.


Actually, your beneficiaries can have Vanguard open an account for themselves,
then have those TSP funds transferred DIRECTLY to Vanguard & go from there.
That's the way I'm doing it (not yet, coz I haven't died....LOL )
Retired 12/19/2012 @ age 57 | Good Bye Tension, Hello Pension !!!

tompillion
Posts: 7
Joined: Sat Jan 09, 2016 2:45 pm

Re: TSP to Vanguard?

Post by tompillion » Thu Jun 23, 2016 5:07 pm

Swansea wrote:I rolled my monies from TSP to Vanguard as I don't mind paying a bit more for better service.


Thanks...sorry for delayed response...a couple follow on questions

- How long ago did you xfer TSP to Vanguard, and how do you describe the "better service?" What does VG do that TSP did not?
- Are you to the point where you are required to take the RMD's, and does VG help with that?
- Do you use VG's PAS and, if so, do you feel you are getting value for the .03%

Thx,

Tom

tompillion
Posts: 7
Joined: Sat Jan 09, 2016 2:45 pm

Re: TSP to Vanguard?

Post by tompillion » Thu Jun 23, 2016 5:18 pm

Jerry55 wrote:
tompillion wrote:I retired two years ago from civil service, and have been debating moving my TSP to Vanguard, since I can no longer contribute to the TSP.


At first, I thought like you, but decided to wait and figure it all out, and I'm glad I did.

I retired CSRS, and opened a Roth IRA w/Vanguard back in Mar. 2012, and thought I'd roll my TSP as well, but think about it.....

The G fund is the ONLY Bond fund that is guaranteed to never lose money. How many Bond funds can say that ?

Then, there's the L Income fund. The G Fund changes it's rate every month or so, and provides intermediate term returns.

I'd have to agree with the above posters to NOT transfer the TSP, but if you do, Leave enough $$$ there so that if things get

rough, you can transfer all of your cash back into the TSP. Once you close it....You will NEVER be able to open it again.

Don't lose that option...


Thanks for the great tip about not closing TSP...wasn't aware. I am still waffling on whether to transfer TSP tp VG, but I definitely will keep TSP open with at least a minimum in it...you sound like you are still a few years away from having to take RMD's, so it is not yet an issue. I have to start with RMD's within a year, so I am wondering if I will be smart enough to do that on my own via TSP, or if I need someone at VG to give advice. Thx

delamer
Posts: 2905
Joined: Tue Feb 08, 2011 6:13 pm

Re: TSP to Vanguard?

Post by delamer » Thu Jun 23, 2016 5:25 pm

Sorry if this was mentioned earlier, the TSP makes sure that you meet your RMD requirement. As in, they will send you a check if your monthly withdrawals, or lack thereof, don't meet your required RMD.

See RMD section:

https://www.tsp.gov/PlanParticipation/L ... tions.html

Engineer250
Posts: 788
Joined: Wed Jun 22, 2016 1:41 pm

Re: TSP to Vanguard?

Post by Engineer250 » Thu Jun 23, 2016 5:27 pm

grabiner wrote:The main reason to keep the TSP is the G fund. The main reason to have money at Vanguard is the options that are not available in the TSP, such as a broader-based international fund (I fund is large-cap developed markets only, while Total International includes emerging markets and small-cap) and other options such as REITs.

Therefore, it makes sense to keep enough in the TSP to hold your G fund needs; this may even be your whole bond allocation, as the G fund is better than any bond fund Vanguard offers. Conversely, you should keep enough outside the TSP to hold your needs for things not offered in the TSP. For the rest of the money, it could be in either account, although keeping the C and S funds in the TSP has the advantage that you can move the money to the G fund later as your target bond allocation increases.


Federal employee here just want to pipe up and say this is almost exactly the strategy I am planning.

First I'll say, if you don't need the income don't touch it. I have a Roth IRA with Vanguard that I plan to invest in REITs and emerging markets (and may one day do commodity ETFs if I feel spunky) but the C,S,I,G funds with the TSP are fantastic. Fees can't be beat either, even by Vanguard. But my Roth is how I dabble in the few things the TSP doesn't offer.

Like the above poster suggests, no one else offers the G. Guaranteed inflation-proof savings. The drawback of TSP near retirement is that you can only withdraw twice basically. You can do one partial withdrawal, then your next one has to be either a) withdraw everything b) set up monthly payments you can never change or c) buy an annuity with your TSP. I plan to use my 1st withdrawal to move all my non-G-Fund money to Vanguard or similar so I can take out of it what I want to over retirement, but only once I am going to tap the money. I'll leave enough in G fund that meets my asset allocation. Then when I need to touch the rest of it again I'll probably pull everything out at that point.

My former employer had Vanguard for the 401k and looking at the fees for the limited funds they offered (if there was a way to grab ANY Vanguard fund I did not see it) I decided quickly to move everything over to the TSP. Especially as I may not stay with the feds the rest of my career, so I want as much as I can have in my TSP so I have a good basis for the G fund as I approach retirement. I will probably substitute it in for my bond allocation, but am 100% equities today. I may also roll future 401ks into the TSP which you can, as well as IRAs, you just can't contribute any more. The transfer from my Vanguard 401k is in process, it is a little trickier than I thought what with the guv'ment wanting paperwork for everything and Vanguard having a policy of doing "no outside paperwork". But hopefully it will move over smoothly despite all that.
Where the tides of fortune take us, no man can know.

User avatar
TimeRunner
Posts: 1122
Joined: Sat Dec 29, 2012 9:23 pm

Re: TSP to Vanguard?

Post by TimeRunner » Thu Jun 23, 2016 6:18 pm

Engineer250 wrote: You can do one partial withdrawal, then your next one has to be either a) withdraw everything b) set up monthly payments you can never change or c) buy an annuity with your TSP.
One small correction - if you opt for monthly payments, "... during the annual change period at the end of each calendar year, you can change the dollar amount of your payments, and you can make a one-time-only change from TSP-computed payments to a specified dollar amount. When you make a change during the annual change period, the TSP must receive Form TSP-73, Change in Monthly Payment Amount, from you by December 15 for the change to be effective with the first payment you receive after December 31." See: https://www.tsp.gov/PDF/formspubs/tspbk02.pdf .

Also from that TSP publication: "However, if you are receiving a series of monthly payments, you can at any time change to a final single payment, or change where or how your payments are sent."

TSP is slowly working on improving withdrawal options. This is one thread that discusses that: viewtopic.php?f=10&t=140180 . Hope this helps.
One cannot enlighten the unconscious. | Endurance athletes are the Bogleheads of sports. | "I like people - I just don't want to be around 'em." - Russell Gordy

Swansea
Posts: 446
Joined: Sat Feb 13, 2016 5:16 am

Re: TSP to Vanguard?

Post by Swansea » Fri Jun 24, 2016 2:00 pm

tompillion wrote:
Swansea wrote:I rolled my monies from TSP to Vanguard as I don't mind paying a bit more for better service.


Thanks...sorry for delayed response...a couple follow on questions

- How long ago did you xfer TSP to Vanguard, and how do you describe the "better service?" What does VG do that TSP did not?

- Are you to the point where you are required to take the RMD's, and does VG help with that?
- Do you use VG's PAS and, if so, do you feel you are getting value for the .03%

Thx,

Tom

Moved the monies in 2005
One big plus is the flexibility to change monthly withdrawals at will. Also, I get personal performance data, portfolio watch, etc. When I figured out how much more the Vanguard fees were, my extra costs were nominal.

Changing Your Monthly Payment Amount
Use Form TSP-73PDF document, Change in Monthly Payment Amount, to do any of the following:
Change the monthly dollar amount you are receiving. You may do this once a year. Your request will become effective the following January.
Or
Change your TSP-computed payments (based on life expectancy) to a specific dollar amount. This is a one-time-only change. Your request will become effective the following January.

I have not, nor do I plan to use Vanguard's advisory service.
Hope this helps.

engineer1969
Posts: 72
Joined: Tue Jul 05, 2011 6:56 pm

Re: TSP to Vanguard?

Post by engineer1969 » Fri Jun 24, 2016 3:28 pm

I'm a Federal employee as well with almost 30 years of service. I have another 10 years before I meet the minimum age requirement to retire. My back of the envelope plan is to make a sizable rollover into an IRA at retirement and spend the years prior to drawing social security converting that money to Roth. I intend to keep the remaining TSP funds in G. Is anyone else using this strategy?

I suspect my plans may change based on future tax law.

retiredjg
Posts: 30347
Joined: Thu Jan 10, 2008 12:56 pm

Re: TSP to Vanguard?

Post by retiredjg » Fri Jun 24, 2016 6:29 pm

engineer1969 wrote:My back of the envelope plan is to make a sizable rollover into an IRA at retirement and spend the years prior to drawing social security converting that money to Roth. I intend to keep the remaining TSP funds in G. Is anyone else using this strategy?

I did part of this plan - roll a chunk to IRA and put the remaining TSP into G and F funds. It is working fine for me. I have not touched my TSP account since setting this up (about 8 or 9 years).

Considered the Roth conversions but it doesn't seem to be that wonderful in my situation. Could be in yours though.

Engineer250
Posts: 788
Joined: Wed Jun 22, 2016 1:41 pm

Re: TSP to Vanguard?

Post by Engineer250 » Mon Jun 27, 2016 3:54 pm

engineer1969 wrote:I'm a Federal employee as well with almost 30 years of service. I have another 10 years before I meet the minimum age requirement to retire. My back of the envelope plan is to make a sizable rollover into an IRA at retirement and spend the years prior to drawing social security converting that money to Roth. I intend to keep the remaining TSP funds in G. Is anyone else using this strategy?

I suspect my plans may change based on future tax law.


Yes as I said much less succinctly above, this is my plan as well. I have a lot longer to go though, and may not be with the feds when I retire. But this is still my plan.
Where the tides of fortune take us, no man can know.

tompillion
Posts: 7
Joined: Sat Jan 09, 2016 2:45 pm

Re: TSP to Vanguard?

Post by tompillion » Tue Jun 28, 2016 1:01 pm

engineer1969 wrote:I'm a Federal employee as well with almost 30 years of service. I have another 10 years before I meet the minimum age requirement to retire. My back of the envelope plan is to make a sizable rollover into an IRA at retirement and spend the years prior to drawing social security converting that money to Roth. I intend to keep the remaining TSP funds in G. Is anyone else using this strategy?

I suspect my plans may change based on future tax law.

Thanks! Good point.

targ
Posts: 86
Joined: Tue Nov 12, 2013 9:23 am

Re: TSP to Vanguard?

Post by targ » Tue Jun 28, 2016 1:24 pm

Jerry55 wrote:
Buford T Justiice wrote:The only downside of the TSP is if you do not have a spouse, and die. Your beneficiaries have to pickup their entire TSP inheritance in one lump sum; without the benefit of taking yearly RMDs.


Actually, your beneficiaries can have Vanguard open an account for themselves,
then have those TSP funds transferred DIRECTLY to Vanguard & go from there.
That's the way I'm doing it (not yet, coz I haven't died....LOL )



Careful. It's not quite as simple as either of these. If the TSP holder dies with a beneficiary, the TSP account becomes a beneficiary participant account. If that beneficiary participant account holder then dies, his beneficiaries CANNOT roll the TSP into an inherited IRA and MUST take the lump sum.
The capacity to learn is a gift; The ability to learn is a skill; The willingness to learn is a choice. | -REBEC OF GINAZ

azanon
Posts: 1463
Joined: Mon Nov 07, 2011 10:34 am
Location: Little Rock, AR
Contact:

Re: TSP to Vanguard?

Post by azanon » Tue Jun 28, 2016 1:37 pm

abuss368 wrote:
LAlearning wrote:
abuss368 wrote:In my opinion, moving our investment portfolio to Vanguard was the best financial decision we ever made.

Thank you Jack Bogle!


Yea, but not from the TSP.


Hi LAlearning,

I am surprised that you would know where we transferred from. In any event it was a wise decision to move to Vanguard.


I'm just catching up on this thread today, but LAs original point is well taken. It's one thing to move you investment portfolio from (insert any location that isn't the TSP) to Vanguard, and that was probably a great move because Vanguard is great. But if it was from the TSP? That's anything but a definite good move.

I bring this up to say, there's not a lot of relevance to comparing relocation to Vanguard from just any ole other plan to moving from the TSP to Vanguard. The TSP is the gold standard for low cost, and the G fund has no equal. It's a classic apples to oranges comparison.

servusdei
Posts: 17
Joined: Sat Jun 25, 2016 2:31 pm

Re: TSP to Vanguard?

Post by servusdei » Tue Jun 28, 2016 2:18 pm

Transferring from pretty much any retirement accounts to Vanguard would be a great idea...except from the TSP. Most 401k plans charge around 1% expense ratio, Vanguard charges as low as 0.05% for VTSAX, but the TSP charges only 0.029%. You can't beat that. Transferring out of the TSP would cost you almost twice as much what you currently pay for investment.

The only major asset class TSP lacks and would be nice to have is Emerging Market, but that is high expense and risky, so it should not be a big proportion of your portfolio anyway.

I wouldn't transfer from TSP to Vanguard even if they pay me $100,000. The difference between .029% and .05% translates to a whopping $1,101,005.39 lost to fees over 50 years, assuming 10% return, and $1,000,000 portfolio. Do yourself a favor, do NOT transfer out of the TSP!!!

User avatar
mrc
Posts: 955
Joined: Sun Jan 10, 2016 6:39 am
Location: right here

Re: TSP to Vanguard?

Post by mrc » Tue Jun 28, 2016 2:57 pm

He he he... If I could start with $1M, live for 50 more years, take no withdrawals, and get a sure 10% return, I really couldn't tell the difference between the two in the end. The very limited withdrawal options are the problem here.
A great challenge of life: Knowing enough to think you're doing it right, but not enough to know you're doing it wrong. — Neil deGrasse Tyson

User avatar
TimeRunner
Posts: 1122
Joined: Sat Dec 29, 2012 9:23 pm

Re: TSP to Vanguard?

Post by TimeRunner » Tue Jun 28, 2016 4:21 pm

mrc wrote: The very limited withdrawal options are the problem here.
Agreed, hence discussion on some of the other BH threads about weighing present day withdrawal needs against future TSP withdrawal options. The compromise that many, including myself, gravitate towards is leaving enough TSP behind as "G Fund" bond-type ballast, and transferring the TIRA to external TIRA to do Roth conversions, and the relatively small Roth to external Roth. If you have substantial TSP Roth, you "should" (have not tried this) be able to transfer all but say $1000, with the Roth TSP to a Roth, the regular TSP to an IRA, then, after the dust settles, transfer back to TSP TIRA as much TIRA as you need for the G Fund ballast, leaving you with your G Fund ballast in TSP IRA, your external IRA available to do Roth IRA conversions before filing for SS, and your Roth. Your non-TSP IRA and non-TSP Roth will have flexible withdrawal options, and the Roth won't have RMDs. Seems entirely reasonable. :beer
One cannot enlighten the unconscious. | Endurance athletes are the Bogleheads of sports. | "I like people - I just don't want to be around 'em." - Russell Gordy

retiredjg
Posts: 30347
Joined: Thu Jan 10, 2008 12:56 pm

Re: TSP to Vanguard?

Post by retiredjg » Tue Jun 28, 2016 4:39 pm

servusdei wrote:Most 401k plans charge around 1% expense ratio, Vanguard charges as low as 0.05% for VTSAX, but the TSP charges only 0.029%. You can't beat that….

I agree with what you are saying. But we have had one poster (out of hundreds, maybe thousands) who actually posted a lower cost plan.

It was shocking. :shock:

Engineer250
Posts: 788
Joined: Wed Jun 22, 2016 1:41 pm

Re: TSP to Vanguard?

Post by Engineer250 » Tue Jun 28, 2016 5:40 pm

TimeRunner wrote:
mrc wrote: The very limited withdrawal options are the problem here.
Agreed, hence discussion on some of the other BH threads about weighing present day withdrawal needs against future TSP withdrawal options. The compromise that many, including myself, gravitate towards is leaving enough TSP behind as "G Fund" bond-type ballast, and transferring the TIRA to external TIRA to do Roth conversions, and the relatively small Roth to external Roth. If you have substantial TSP Roth, you "should" (have not tried this) be able to transfer all but say $1000, with the Roth TSP to a Roth, the regular TSP to an IRA, then, after the dust settles, transfer back to TSP TIRA as much TIRA as you need for the G Fund ballast, leaving you with your G Fund ballast in TSP IRA, your external IRA available to do Roth IRA conversions before filing for SS, and your Roth. Your non-TSP IRA and non-TSP Roth will have flexible withdrawal options, and the Roth won't have RMDs. Seems entirely reasonable. :beer


Just want to point out withdrawals have to come out proportionally. So if you have $1M if your TSP and $750k is tax deferred and $250k is Roth, and you withdraw $100k, it will come out $75k pre-tax, $25k Roth.

Like others have mentioned, I am hopeful withdrawal options for the TSP will get better in the future, certain things have already improved (I believe the target retirement funds are new-ish) so no reason to think it will be terrible forever. I stand by my earlier statement, and others, that it's only the withdrawal limitations that make it weak. The lack of emerging markets is a minor issue, but irrelevant to someone near retirement and easy to deal with with outside accounts for someone with a long way to go.
Where the tides of fortune take us, no man can know.

User avatar
TimeRunner
Posts: 1122
Joined: Sat Dec 29, 2012 9:23 pm

Re: TSP to Vanguard?

Post by TimeRunner » Tue Jun 28, 2016 6:11 pm

Engineer250 wrote:Just want to point out withdrawals have to come out proportionally. So if you have $1M if your TSP and $750k is tax deferred and $250k is Roth, and you withdraw $100k, it will come out $75k pre-tax, $25k Roth.
Correct, hence the workaround for folks with significant Roth TSPs. For your example, transfer $999K out of the TSP account, of which almost $750K goes to an IRA, and almost $250K goes to a Roth. You've left $1K in the TSP so the account is not closed. After the dust settles, and you decide you need say $350K in G-Fund bonds, transfer $350K from your IRA back into the TSP IRA. Don't transfer anything back into your TSP Roth. Your TSP Roth at this point will have about $250 in it - no big deal, and enjoy the beer-money Roth TSP RMDs.
One cannot enlighten the unconscious. | Endurance athletes are the Bogleheads of sports. | "I like people - I just don't want to be around 'em." - Russell Gordy

Engineer250
Posts: 788
Joined: Wed Jun 22, 2016 1:41 pm

Re: TSP to Vanguard?

Post by Engineer250 » Wed Jun 29, 2016 9:45 am

TimeRunner wrote:
Engineer250 wrote:Just want to point out withdrawals have to come out proportionally. So if you have $1M if your TSP and $750k is tax deferred and $250k is Roth, and you withdraw $100k, it will come out $75k pre-tax, $25k Roth.
Correct, hence the workaround for folks with significant Roth TSPs. For your example, transfer $999K out of the TSP account, of which almost $750K goes to an IRA, and almost $250K goes to a Roth. You've left $1K in the TSP so the account is not closed. After the dust settles, and you decide you need say $350K in G-Fund bonds, transfer $350K from your IRA back into the TSP IRA. Don't transfer anything back into your TSP Roth. Your TSP Roth at this point will have about $250 in it - no big deal, and enjoy the beer-money Roth TSP RMDs.


Thanks. I can't believe I never thought of this. You just blew my mind. I was exactly trying to figure out how to get out all/most of my Roth (I mean, in 30 years, I plan ahead) and still have some pre-tax left in the TSP and this method is beautiful.
Where the tides of fortune take us, no man can know.

User avatar
TimeRunner
Posts: 1122
Joined: Sat Dec 29, 2012 9:23 pm

Re: TSP to Vanguard?

Post by TimeRunner » Wed Jun 29, 2016 11:13 am

Engineer250 wrote:Thanks. I can't believe I never thought of this. You just blew my mind. I was exactly trying to figure out how to get out all/most of my Roth (I mean, in 30 years, I plan ahead) and still have some pre-tax left in the TSP and this method is beautiful.
I can't claim credit for this - it's been posted at least a few times in the forum. The TSP Roth option hasn't been around for very long, so there's not many folks that have six-figure TSP Roth accounts yet, but going forward, this will certainly be discussed and dissected, and hopefully reports of success will be posted. :beer
One cannot enlighten the unconscious. | Endurance athletes are the Bogleheads of sports. | "I like people - I just don't want to be around 'em." - Russell Gordy

mdshumaker
Posts: 10
Joined: Wed Jul 20, 2016 10:28 am

Re: TSP to Vanguard?

Post by mdshumaker » Wed Jul 20, 2016 10:58 am

I'm 4 years from federal retirement. Can't decide which is better - the annuity method of withdrawal or the set amount method. Also curious about a good asset allocation in retirement for TSP. Moderate risk. Was thinking of switching the account to a financial planner at retirement but have decided against it because of fees since reading posts on Bogleheads.

delamer
Posts: 2905
Joined: Tue Feb 08, 2011 6:13 pm

Re: TSP to Vanguard?

Post by delamer » Wed Jul 20, 2016 11:55 am

mdshumaker wrote:I'm 4 years from federal retirement. Can't decide which is better - the annuity method of withdrawal or the set amount method. Also curious about a good asset allocation in retirement for TSP. Moderate risk. Was thinking of switching the account to a financial planner at retirement but have decided against it because of fees since reading posts on Bogleheads.



With interest rates so low, now is not a good time to buy an annuity. Of course, that may change in four years.

It seems to me that since feds (and I am a retired one) have a significant pension and often Social Security, unless they have very high fixed expenses, it is better to keep the TSP funds available rather than tie them up in an annuity.

As far as asset allocation, it depends in part on how much you'll be relying on the TSP money in retirement. If you will need to draw it down to meet expenses, then go more conservative than if you plan to leave it as an inheritance.

retiredjg
Posts: 30347
Joined: Thu Jan 10, 2008 12:56 pm

Re: TSP to Vanguard?

Post by retiredjg » Wed Jul 20, 2016 12:10 pm

mdshumaker, you really need to start your own thread with more information in order to get the fullest benefit from people's answers. However, there are some simple generalities that might get you started.

It appears that most people do not annuitize their TSP accounts. This is because most federal retirees already have two annuity income streams (pension and SS for FERS and some CSRS retirees). Often, a spouse also has an income stream too. I think few find a need for an additional guaranteed income stream from annuitizing TSP money. Until/unless you actually see a need for that, I'd suggest that you NOT annuitize it.

We know the withdrawal options you have are limited. My suggestion is to consider using your 1 time lump sum withdrawal (if you have not already used it) and move some money to IRA at a place like Vanguard. Use that as a pot for extra income or vacation or occasional purchases that your pension/SS income do not cover. After several months or a few years, it will be clearer what you need to do with the rest of your TSP money or if you need to even do anything at all.

So I'm suggesting that you not use either of the options you mentioned - annuity or set amount method. Both of those are too restrictive (what if you need $20 for a new roof?) and your annuity money might not go to your heirs if you die. When the time comes to actually start tapping some of that money, move it to IRA so that you can take whatever you need when you need it.

Even if you find you need a guaranteed and unending income stream from your TSP money (rather than just taking out a certain amount each month as needed), I've heard you can get a better annuity deal at places other than what the govt offers.

wfromm
Posts: 29
Joined: Mon Apr 04, 2016 10:16 pm

Re: TSP to Vanguard?

Post by wfromm » Wed Jul 20, 2016 1:08 pm

I like the low fees and fund choices of the TSP, but I dislike the inability to Roth convert. Maybe this will change in time. Also, the inability to roll a Roth IRA into the TSP.

MichDad
Posts: 320
Joined: Sat Apr 20, 2013 3:50 pm

Re: TSP to Vanguard?

Post by MichDad » Wed Jul 20, 2016 1:40 pm

TimeRunner wrote:
Engineer250 wrote:Thanks. I can't believe I never thought of this. You just blew my mind. I was exactly trying to figure out how to get out all/most of my Roth (I mean, in 30 years, I plan ahead) and still have some pre-tax left in the TSP and this method is beautiful.
I can't claim credit for this - it's been posted at least a few times in the forum. The TSP Roth option hasn't been around for very long, so there's not many folks that have six-figure TSP Roth accounts yet, but going forward, this will certainly be discussed and dissected, and hopefully reports of success will be posted. :beer


I agree with TimeRunner (as always, it seems). Here's a link to my post on this topic from last September:

https://www.bogleheads.org/forum/viewtopic.php?f=10&t=140180&start=50#p2609340

As of yesterday, almost eight percent of my total TSP account balance was in the Roth TSP. That percentage is increasing slowly every two weeks because all of my new contributions are into the Roth TSP. Only the five percent government match and earnings on my regular TSP are going into the regular TSP.

MichDad

MichDad
Posts: 320
Joined: Sat Apr 20, 2013 3:50 pm

Re: TSP to Vanguard?

Post by MichDad » Wed Jul 20, 2016 1:53 pm

wfromm wrote:I like the low fees and fund choices of the TSP, but I dislike the inability to Roth convert. Maybe this will change in time.


I agree with you that the inability to convert regular TSP assets to Roth TSP assets is a significant drawback of the TSP. Unfortunately, unless TSP participants make their opinions known to the Federal Retirement Thrift Investment Board, this issue is unlikely to be addressed in the next few years. In the meantime, there appears to be a cumbersome workaround. Please refer to messages posted by TimeRunner and me, above. Unfortunately, even the workaround is not perfect. It requires that some TSP assets be placed into more expensive funds outside of the TSP, such as at Vanguard. Also, IRA assets often have fewer legal protections than TSP (and 401(k)) assets. Finally, the workaround still leaves some Roth assets in the TSP, perhaps as little as a few dollars, though.

MichDad

Post Reply