What to do with a small TSP balance?

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Topic Author
DouroBound
Posts: 100
Joined: Mon Mar 12, 2018 7:55 pm

What to do with a small TSP balance?

Post by DouroBound » Mon Dec 03, 2018 7:48 pm

I have a small TSP balance from a short stint in government many years ago, currently about 3.5% of my total retirement funds and allocated 100% to the G fund. I do not anticipate going back into government service. I've been slowly simplifying things this year with the benefit of advice from this board and am trying to decide what, if anything, to do with this account. Options:

(1) Leave it in the G Fund as this is a unique product not available elsewhere. Downside is it will not grow much and when it comes time to retire, it will be a pretty small piece of the pie. From my perspective, I don't mind dealing with a small account. But my concern is that if I am incapacitated, a small account may fall through the cracks.

(2) Put it in a riskier TSP option (and make a corresponding adjustment to one of my larger retirement accounts). The downside here is forgoing the G Fund. Upside is that making this account grow a bit more (I have ~20 years until I will have to take distributions) will make it less likely to slip through the cracks later on. I've not really looked into the C or I Funds, but I guess I'd just go 100% into one of those if I took this option.

(3) Close the account and roll the funds into another retirement account. This would reduce overall number of accounts, but seems like a bit of a pain and I'd also miss out of the G Fund. I started down this road a while ago, but then the need to send in notarized consents from my wife and other headaches led me to give up.

Thoughts?

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corn18
Posts: 1562
Joined: Fri May 22, 2015 6:24 am

Re: What to do with a small TSP balance?

Post by corn18 » Mon Dec 03, 2018 7:56 pm

I have $3,500 in my TSP in the G fund. I retired in 2008 from the Navy and forgot I even had any money in there. I was thinking about moving it into my 401k, but the nice folks here on BH said NO WAY! Keep a small amount in there because the G fund might be the most awesome fixed income fund ever. That got me thinking and I left it in there. When I retire for the second time (non gov't job), I may roll my entire 401k into the TSP because they are getting a lot more flexible in their withdrawal rules starting in 2019.

So, leave it in there and consider transferring your other retirement finds into it.
Don't do something, just stand there!

Dontridetheindexdown
Posts: 94
Joined: Sat Feb 14, 2015 10:08 pm

Re: What to do with a small TSP balance?

Post by Dontridetheindexdown » Mon Dec 03, 2018 8:05 pm

My advice, based on experience, KEEP IT OPEN.

In a situation analogous to yours, we transferred a significant sum into the G Fund a few years ago.

We plan to do so again in a few years.

Our strategy, over many years, has been to realize and lock in our gains!

There are certain aspects of the TSP that are not replicated elsewhere.

You can PM me for more details, but my advice is always keep the TSP as an investing option.

Topic Author
DouroBound
Posts: 100
Joined: Mon Mar 12, 2018 7:55 pm

Re: What to do with a small TSP balance?

Post by DouroBound » Mon Dec 03, 2018 8:12 pm

corn18 wrote:
Mon Dec 03, 2018 7:56 pm
I have $3,500 in my TSP in the G fund. I retired in 2008 from the Navy and forgot I even had any money in there. I was thinking about moving it into my 401k, but the nice folks here on BH said NO WAY! Keep a small amount in there because the G fund might be the most awesome fixed income fund ever. That got me thinking and I left it in there. When I retire for the second time (non gov't job), I may roll my entire 401k into the TSP because they are getting a lot more flexible in their withdrawal rules starting in 2019.

So, leave it in there and consider transferring your other retirement finds into it.
I'd forgotten about the option to roll INTO the TSP. Thanks for the reminder. That's certainly another good reason to hold onto it that I hadn't considered.

Topic Author
DouroBound
Posts: 100
Joined: Mon Mar 12, 2018 7:55 pm

Re: What to do with a small TSP balance?

Post by DouroBound » Mon Dec 03, 2018 8:14 pm

Dontridetheindexdown wrote:
Mon Dec 03, 2018 8:05 pm
My advice, based on experience, KEEP IT OPEN.

In a situation analogous to yours, we transferred a significant sum into the G Fund a few years ago.

We plan to do so again in a few years.

Our strategy, over many years, has been to realize and lock in our gains!

There are certain aspects of the TSP that are not replicated elsewhere.

You can PM me for more details, but my advice is always keep the TSP as an investing option.
Thanks. I'd totally forgotten about the option of rolling into the TSP and thereby getting more into the G Fund. I'd been thinking about this as if I was forever limited to my small account balance. Very helpful reminder.

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