Should I keep money in TSP long term?

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renegade06
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Should I keep money in TSP long term?

Post by renegade06 » Thu Feb 21, 2019 11:07 am

Hello everyone! I was wondering if I should keep money is my TSP for the long term. I think the funds are pretty well diversified and the costs are low.

In speaking with my financial adviser, he was not a big fan of the TSP and thinks that I should consolidate my account outside of the TSP. I have about $150k in TSP, another $50k in a Traditional IRA with Vanguard and another $60k in my current company 401k plan. I am 43 years old.

Any thoughts you have on this would be appreciated. Thanks!

MotoTrojan
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Re: Should I keep money in TSP long term?

Post by MotoTrojan » Thu Feb 21, 2019 11:10 am

Does this advisor have anything to gain from you switching? I’m not super familiar with TSP but I believe it’s got excellent bond options. Unless you need more exotic ETFs that only an IRA can offer I’d probably leave it or some of it.

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White Coat Investor
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Re: Should I keep money in TSP long term?

Post by White Coat Investor » Thu Feb 21, 2019 11:14 am

I am keeping money in the TSP long term. I keep rolling money into it although I've been out of the military for 9 years now.
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Re: Should I keep money in TSP long term?

Post by lassevirensghost » Thu Feb 21, 2019 11:14 am

I envy the TSP, which has some of the best fund options in the country for a retirement plan.
“Groucho, how do you invest your money?” | “All in bonds.” | “But Groucho, they don’t pay much return.” | “They do when you have a lot of em!”

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renegade06
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Re: Should I keep money in TSP long term?

Post by renegade06 » Thu Feb 21, 2019 11:19 am

MotoTrojan wrote:
Thu Feb 21, 2019 11:10 am
Does this advisor have anything to gain from you switching? I’m not super familiar with TSP but I believe it’s got excellent bond options. Unless you need more exotic ETFs that only an IRA can offer I’d probably leave it or some of it.
He would have a vested interest in that it would be more $$ for him through fees. I don't think he's trying to pull a fast one on me, but I kind of like the TSP for the low costs. I'm trying to set up a backdoor IRA, so I'm told that if I have the outstanding IRA with Vanguard, it will create problems for me setting up a backdoor IRA.

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Re: Should I keep money in TSP long term?

Post by MotoTrojan » Thu Feb 21, 2019 11:24 am

renegade06 wrote:
Thu Feb 21, 2019 11:19 am
MotoTrojan wrote:
Thu Feb 21, 2019 11:10 am
Does this advisor have anything to gain from you switching? I’m not super familiar with TSP but I believe it’s got excellent bond options. Unless you need more exotic ETFs that only an IRA can offer I’d probably leave it or some of it.
He would have a vested interest in that it would be more $$ for him through fees. I don't think he's trying to pull a fast one on me, but I kind of like the TSP for the low costs. I'm trying to set up a backdoor IRA, so I'm told that if I have the outstanding IRA with Vanguard, it will create problems for me setting up a backdoor IRA.
If you mean a backdoor Roth IRA then yes, having any pre-tax IRA assests will be problematic so getting those into TSP or a 40X would be a good option.

It does sound like he is pulling a fast one honestly. I'd ask for specific reasons to swap and then post those here for review.

02nz
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Re: Should I keep money in TSP long term?

Post by 02nz » Thu Feb 21, 2019 11:25 am

Keep your money in the TSP, at least for the bond allocation - the G fund is a uniquely good deal. And soon(ish) the I fund will have emerging markets coverage, addressing the main shortcoming of the fund (which has a significantly lower expense ratio than Vanguard Total International).

Double check but I believe you need to keep at least $1K in TSP to keep the account open. So if you transfer out a portion, leave enough to keep the account open. That also gives you options to roll balances into the TSP later.

Also, how is this "advisor" compensated? By the hour? By AUM? Through sales charges? You are quite right that he has a vested interest in getting you to moving money out of the TSP.

wolf359
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Re: Should I keep money in TSP long term?

Post by wolf359 » Thu Feb 21, 2019 11:31 am

I have also been envious of those who were able to use the TSP. I have never had a 401k program that came close to matching their low expenses. Vanguard, Schwab, and Fidelity now have funds that are at or below those costs, but you have to access them in a taxable or IRA account.

An advisor who dislikes the TSP probably dislikes it for the reason that they are assets outside of his control, and he can't bill you for them.

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MillennialFinance19
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Re: Should I keep money in TSP long term?

Post by MillennialFinance19 » Thu Feb 21, 2019 11:39 am

renegade06 wrote:
Thu Feb 21, 2019 11:07 am

In speaking with my financial adviser, he was not a big fan of the TSP and thinks that I should consolidate my account outside of the TSP. I have about $150k in TSP, another $50k in a Traditional IRA with Vanguard and another $60k in my current company 401k plan. I am 43 years old.
I mean, I'm not sure you need the advice of the financial advisor in the first place, much less when it comes to TSP. If you move $100k + to his control, he's certainly going to profit off of it.

DrGoogle2017
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Re: Should I keep money in TSP long term?

Post by DrGoogle2017 » Thu Feb 21, 2019 11:39 am

Good thread, I’m debating whether to close my husband’s TSP or not. I left it open just in case I change my mind.

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renegade06
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Re: Should I keep money in TSP long term?

Post by renegade06 » Thu Feb 21, 2019 11:49 am

Thanks for your thoughts... I am going to keep my TSP. As far as the backdoor IRA, my plan is to do that through my financial adviser with new money going forward (I'm not sure how the paperwork is done). This will be on top of maxing my 401k at work.

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Elric
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Re: Should I keep money in TSP long term?

Post by Elric » Thu Feb 21, 2019 11:54 am

When we had a financial adviser, he always advised keeping the TSP my wife had, especially as the "G" fund was hard to beat anywhere, and there are other good, low-cost options as well. I sort of got the impression he was upholding his fiduciary duty, sort of like, "Dang! I'd like to demonstrate my expertise and recommend better places for that portion of their money, but I can't honestly come up with any." We no longer use an adviser, but that money is still in TSP.
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Re: Should I keep money in TSP long term?

Post by Bronko » Thu Feb 21, 2019 11:58 am

Don't close the TSP or you can't get back in.

I wouldn't leave the benefits of TSP. Remember the new rules come into effect soon. This will allow many more options of control and withdrawal options which were the primary reasons for individuals leaving the TSP to begin with.
Never let a little bit of money get in the way of a real good time.

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Re: Should I keep money in TSP long term?

Post by Spirit Rider » Thu Feb 21, 2019 12:03 pm

The TSP has distribution restrictions making it less than ideal in the withdrawal phase. However, as @Bronko pointed out that is all going away on 9/15/19 and there will be no good reason to rollover TSP assets to an IRA even in the withdrawal phase.

If you want to see your advisor's motivations, just tell him not only are you not rolling over the TSP to an IRA, you are rolling over the IRA to either the TSP of your current 401k. Watch their head explode as they try to use standard sales psychology to convince you otherwise. How else are they going to pay for their kids college education.

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renegade06
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Re: Should I keep money in TSP long term?

Post by renegade06 » Thu Feb 21, 2019 12:11 pm

Elric wrote:
Thu Feb 21, 2019 11:54 am
When we had a financial adviser, he always advised keeping the TSP my wife had, especially as the "G" fund was hard to beat anywhere, and there are other good, low-cost options as well. I sort of got the impression he was upholding his fiduciary duty, sort of like, "Dang! I'd like to demonstrate my expertise and recommend better places for that portion of their money, but I can't honestly come up with any." We no longer use an adviser, but that money is still in TSP.
What is so great about the G fund? I've seen a number of people say good things about it... how does that compare to the F fund?

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Re: Should I keep money in TSP long term?

Post by Spirit Rider » Thu Feb 21, 2019 12:24 pm

renegade06 wrote:
Thu Feb 21, 2019 12:11 pm
What is so great about the G fund? I've seen a number of people say good things about it... how does that compare to the F fund?
It is an intermediate-term principal protected bond fund. It has better than money market rates with no interest rate risk. The current rate is 2.625%
Last edited by Spirit Rider on Thu Feb 21, 2019 12:28 pm, edited 1 time in total.

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Re: Should I keep money in TSP long term?

Post by cherijoh » Thu Feb 21, 2019 12:24 pm

renegade06 wrote:
Thu Feb 21, 2019 12:11 pm
Elric wrote:
Thu Feb 21, 2019 11:54 am
When we had a financial adviser, he always advised keeping the TSP my wife had, especially as the "G" fund was hard to beat anywhere, and there are other good, low-cost options as well. I sort of got the impression he was upholding his fiduciary duty, sort of like, "Dang! I'd like to demonstrate my expertise and recommend better places for that portion of their money, but I can't honestly come up with any." We no longer use an adviser, but that money is still in TSP.
What is so great about the G fund? I've seen a number of people say good things about it... how does that compare to the F fund?
From The TSP website
The G Fund interest rate calculation is based on the weighted average yield of all outstanding Treasury notes and bonds with 4 or more years to maturity. As a result, participants who invest in the G Fund are rewarded with a long-term rate on what is essentially a short-term security. Generally, long-term interest rates are higher than short-term rates.

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Re: Should I keep money in TSP long term?

Post by pdavi21 » Thu Feb 21, 2019 12:25 pm

Depends on when you are going to do ROTH conversions, if ever.
Take traditional money OUT (using a convoluted method) as you need to convert it.
If you have extra Traditional IRA you won't be converting soon, consider rolling that INTO the TSP.

Also, depends on whether you want to take RMDs on ROTH.
If you are close to 70, and do not want to take RMDs from ROTH TSP balance,
Take all ROTH money OUT (using a convoluted method).
"We spend a great deal of time studying history, which, let's face it, is mostly the history of stupidity." -Stephen Hawking

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Re: Should I keep money in TSP long term?

Post by 02nz » Thu Feb 21, 2019 12:27 pm

renegade06 wrote:
Thu Feb 21, 2019 11:49 am
Thanks for your thoughts... I am going to keep my TSP. As far as the backdoor IRA, my plan is to do that through my financial adviser with new money going forward (I'm not sure how the paperwork is done). This will be on top of maxing my 401k at work.
This really isn't that hard: https://www.bogleheads.org/wiki/Backdoor_Roth. You don't need the assistance of an "advisor" for this (and many "advisors" don't actually know how to do it).

You need to figure out what the advisor is actually costing you, and evaluate whether his services are actually worth that money.

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Re: Should I keep money in TSP long term?

Post by cherijoh » Thu Feb 21, 2019 12:37 pm

Elric wrote:
Thu Feb 21, 2019 11:54 am
When we had a financial adviser, he always advised keeping the TSP my wife had, especially as the "G" fund was hard to beat anywhere, and there are other good, low-cost options as well. I sort of got the impression he was upholding his fiduciary duty, sort of like, "Dang! I'd like to demonstrate my expertise and recommend better places for that portion of their money, but I can't honestly come up with any." We no longer use an adviser, but that money is still in TSP.
IMO, any advisor recommending a client ditch the TSP during the accumulation phase (in which OP currently is since he mentioned Backdoor Roth) is definitely NOT a fiduciary.

I question why the OP wants to get tangled up with this advisor in the first place. I recommend searching for one of the many threads about breaking up with a financial advisor.

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renegade06
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Re: Should I keep money in TSP long term?

Post by renegade06 » Thu Feb 21, 2019 12:44 pm

Thanks to all for your thoughtful comments. I love this group!

Ybsybs
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Re: Should I keep money in TSP long term?

Post by Ybsybs » Thu Feb 21, 2019 1:17 pm

I see value in transferring Roth TSP shares into a Roth IRA elsewhere if you are nearing 70 to avoid taking Roth RMDs. I'm planning to evaluate doing that with my TSP in my late sixties.

Non-spouse heirs inheriting a TSP account don't have as many options for tax management of their distributions as non-spouse heirs inheriting an IRA account. If that remains true as I age (and if my spouse pre-deceases me), I *might* later in life choose to close my TSP to make things easier for my heirs. Whether or not I do that will depend whether it seems like it'll really matter to my heirs to be able to take whatever's leftover as a more extended distribution.

But for now, I'm delighted to have TSP and when I left my last job, I rolled my 401k balance into my TSP rather than put it in a Vanguard IRA.

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Re: Should I keep money in TSP long term?

Post by retiredjg » Thu Feb 21, 2019 1:22 pm

The only reason an advisor would suggest taking money out of the TSP and putting it into an IRA is to make more money off your money either through an AUM agreement or through loads or some other mechanism that is not in your best interest.

An ethical advisor would not suggest this. You should consider what that means.

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Re: Should I keep money in TSP long term?

Post by whodidntante » Thu Feb 21, 2019 1:28 pm

I would consolidate my financial advisors to one.

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Re: Should I keep money in TSP long term?

Post by fujiters » Thu Feb 21, 2019 1:41 pm

DrGoogle2017 wrote:
Thu Feb 21, 2019 11:39 am
Good thread, I’m debating whether to close my husband’s TSP or not. I left it open just in case I change my mind.
If this this an inherited TSP, know that if you die while still holding the account in the TSP, your heirs will not be able to continue holding the account in the TSP, nor can they roll it into an IRA, which could lead to a large tax event for them. If you're holding a beneficiary participant account, I'd roll it into an IRA.

https://m.govexec.com/pay-benefits/reti ... are/63611/

For a regular TSP account holder, definitely keep the money in there for all the aforementioned reasons (low fees, uniquely attractive G Fund).
“The purpose of the margin of safety is to render the forecast unnecessary.” -Benjamin Graham

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Re: Should I keep money in TSP long term?

Post by DrGoogle2017 » Thu Feb 21, 2019 1:55 pm

fujiters wrote:
Thu Feb 21, 2019 1:41 pm
DrGoogle2017 wrote:
Thu Feb 21, 2019 11:39 am
Good thread, I’m debating whether to close my husband’s TSP or not. I left it open just in case I change my mind.
If this this an inherited TSP, know that if you die while still holding the account in the TSP, your heirs will not be able to continue holding the account in the TSP, nor can they roll it into an IRA, which could lead to a large tax event for them. If you're holding a beneficiary participant account, I'd roll it into an IRA.

https://m.govexec.com/pay-benefits/reti ... are/63611/

For a regular TSP account holder, definitely keep the money in there for all the aforementioned reasons (low fees, uniquely attractive G Fund).
Thanks for reminding me. This is one reason I didn’t want to keep at TSP. I’m also thinking to roll over to his IRA, simplify my kid’s life if something happens to us.

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Re: Should I keep money in TSP long term?

Post by retiredjg » Thu Feb 21, 2019 2:02 pm

DrGoogle2017 wrote:
Thu Feb 21, 2019 1:55 pm
Thanks for reminding me. This is one reason I didn’t want to keep at TSP. I’m also thinking to roll over to his IRA, simplify my kid’s life if something happens to us.
It is unclear just whose IRA you mean, but if you are the only beneficiary, I think it will have to go to your IRA, not somebody else's IRA.

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Re: Should I keep money in TSP long term?

Post by DrGoogle2017 » Thu Feb 21, 2019 2:05 pm

retiredjg wrote:
Thu Feb 21, 2019 2:02 pm
DrGoogle2017 wrote:
Thu Feb 21, 2019 1:55 pm
Thanks for reminding me. This is one reason I didn’t want to keep at TSP. I’m also thinking to roll over to his IRA, simplify my kid’s life if something happens to us.
It is unclear just whose IRA you mean, but if you are the only beneficiary, I think it will have to go to your IRA, not somebody else's IRA.
My husband’s IRA. But I manage his account. But I’m thinking of long term, I believe we have secondary beneficiaries too. But once I’m 70, I don’t want to move anything any more. I just want a set and forget.

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Re: Should I keep money in TSP long term?

Post by Johnsson » Thu Feb 21, 2019 2:24 pm

White Coat Investor wrote:
Thu Feb 21, 2019 11:14 am
I am keeping money in the TSP long term. I keep rolling money into it although I've been out of the military for 9 years now.
In what funds of the TSP are you investing? G-fund? other...?

My DS is recent discharged and wondering which funds in TSP are beneficial (as compared to rolling over to Vanguard).

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Re: Should I keep money in TSP long term?

Post by Dottie57 » Thu Feb 21, 2019 2:30 pm

lassevirensghost wrote:
Thu Feb 21, 2019 11:14 am
I envy the TSP, which has some of the best fund options in the country for a retirement plan.
+1

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Re: Should I keep money in TSP long term?

Post by delamer » Thu Feb 21, 2019 2:33 pm

Johnsson wrote:
Thu Feb 21, 2019 2:24 pm
White Coat Investor wrote:
Thu Feb 21, 2019 11:14 am
I am keeping money in the TSP long term. I keep rolling money into it although I've been out of the military for 9 years now.
In what funds of the TSP are you investing? G-fund? other...?

My DS is recent discharged and wondering which funds in TSP are beneficial (as compared to rolling over to Vanguard).
It all depends on his risk tolerance. If he’s young and not risk adverse, most of his money should go into the C, S, and/or I funds.

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Johnsson
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Re: Should I keep money in TSP long term?

Post by Johnsson » Thu Feb 21, 2019 2:43 pm

delamer wrote:
Thu Feb 21, 2019 2:33 pm
It all depends on his risk tolerance. If he’s young and not risk adverse, most of his money should go into the C, S, and/or I funds.
He has no issue with risk. I assume the funds mentioned would be equivalent to the funds cross-referenced here... viewtopic.php?f=10&t=150267

He's no longer in the Army, making periodic contributions. What reasons are there to not rollover into equivalents at Vanguard (for consolidation purposes)?

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Re: Should I keep money in TSP long term?

Post by AstroJohn » Thu Feb 21, 2019 2:54 pm

I am just turning 69 and ahead of RMDs have transferred my TSP (all G fund) into my IRA. While I know changes are coming that provide more withdrawal options, I decided that having everything in one place would be easier for DW if I go first. Also, you have to consider the next generation and their withdrawal options for after DW departs. Finally, I have always been somewhat annoyed/worried by TSPs statements that if someone manages to get access to your account and figure out a way to drain it, you are on your own. My guess is that Fidelity would make me whole.

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Re: Should I keep money in TSP long term?

Post by carol-brennan » Thu Feb 21, 2019 3:01 pm

renegade06 wrote:
Thu Feb 21, 2019 11:07 am
Any thoughts you have on this would be appreciated. Thanks!
Yes. TSP is the best thing going.

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Re: Should I keep money in TSP long term?

Post by carol-brennan » Thu Feb 21, 2019 3:03 pm

AstroJohn wrote:
Thu Feb 21, 2019 2:54 pm
Finally, I have always been somewhat annoyed/worried by TSPs statements that if someone manages to get access to your account and figure out a way to drain it, you are on your own. My guess is that Fidelity would make me whole.

Whoa. Those are pretty big assumptions on which to base a decision.

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Re: Should I keep money in TSP long term?

Post by AstroJohn » Thu Feb 21, 2019 3:07 pm

carol-brennan wrote:
Thu Feb 21, 2019 3:03 pm
AstroJohn wrote:
Thu Feb 21, 2019 2:54 pm
Finally, I have always been somewhat annoyed/worried by TSPs statements that if someone manages to get access to your account and figure out a way to drain it, you are on your own. My guess is that Fidelity would make me whole.

Whoa. Those are pretty big assumptions on which to base a decision.
I was a highly-paid fed for a very long time. There is a lot of money involved. And I had a bad experience with my agency not backing me up on a government supplied credit card issue.

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Re: Should I keep money in TSP long term?

Post by Spirit Rider » Thu Feb 21, 2019 3:10 pm

AstroJohn wrote:
Thu Feb 21, 2019 2:54 pm
Finally, I have always been somewhat annoyed/worried by TSPs statements that if someone manages to get access to your account and figure out a way to drain it, you are on your own. My guess is that Fidelity would make me whole.
Fidelity does have a Customer Protection Guarantee, but you have to not be at fault. You did not share your passwords, you took reasonable steps to secure your access devices with anti-virus, malware protection, etc... I have no information on how they approach this, but they do require you to agree to a forensic analysis if it was your device that caused the loss. I'm thinking that if you have no installed protections and your device has viruses, trojans, malware etc... You might be out of luck.

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Re: Should I keep money in TSP long term?

Post by AstroJohn » Thu Feb 21, 2019 3:14 pm

Spirit Rider wrote:
Thu Feb 21, 2019 3:10 pm
AstroJohn wrote:
Thu Feb 21, 2019 2:54 pm
Finally, I have always been somewhat annoyed/worried by TSPs statements that if someone manages to get access to your account and figure out a way to drain it, you are on your own. My guess is that Fidelity would make me whole.
Fidelity does have a Customer Protection Guarantee, but you have to not be at fault. You did not share your passwords, you took reasonable steps to secure your access devices with anti-virus, malware protection, etc... I have no information on how they approach this, but they do require you to agree to a forensic analysis if it was your device that caused the loss. I'm thinking that if you have no installed protections and your device has viruses, trojans, malware etc... You might be out of luck.
I would rather trust Fidelity than TSP. That being said, note that I had other reasons for not keeping the assets in TSP. To me they were sufficient. The fewer accounts for DW or children to deal with the better.

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Re: Should I keep money in TSP long term?

Post by UpperNwGuy » Thu Feb 21, 2019 3:20 pm

AstroJohn wrote:
Thu Feb 21, 2019 3:07 pm
carol-brennan wrote:
Thu Feb 21, 2019 3:03 pm
AstroJohn wrote:
Thu Feb 21, 2019 2:54 pm
Finally, I have always been somewhat annoyed/worried by TSPs statements that if someone manages to get access to your account and figure out a way to drain it, you are on your own. My guess is that Fidelity would make me whole.

Whoa. Those are pretty big assumptions on which to base a decision.
I was a highly-paid fed for a very long time. There is a lot of money involved. And I had a bad experience with my agency not backing me up on a government supplied credit card issue.
Any issue you had with your agency about a government credit card has nothing whatsoever to do with your TSP.

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Re: Should I keep money in TSP long term?

Post by 02nz » Thu Feb 21, 2019 3:29 pm

AstroJohn wrote:
Thu Feb 21, 2019 2:54 pm
I am just turning 69 and ahead of RMDs have transferred my TSP (all G fund) into my IRA. While I know changes are coming that provide more withdrawal options, I decided that having everything in one place would be easier for DW if I go first. Also, you have to consider the next generation and their withdrawal options for after DW departs. Finally, I have always been somewhat annoyed/worried by TSPs statements that if someone manages to get access to your account and figure out a way to drain it, you are on your own. My guess is that Fidelity would make me whole.
No system is perfect. However, IMO it's significantly harder for someone to drain your TSP account. For one thing, withdrawals are only possible after you leave federal service, and the form has to be notarized. I'm sure there are other vulnerabilities (maybe a loan - but that's capped at 50K or 1/2 of account balance, whichever is less). But the fact you can't set up a linked bank account and transfer everything out makes it significantly less vulnerable than just about every other brokerage or online banking system I can think of.

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Re: Should I keep money in TSP long term?

Post by 02nz » Thu Feb 21, 2019 3:33 pm

Johnsson wrote:
Thu Feb 21, 2019 2:43 pm
delamer wrote:
Thu Feb 21, 2019 2:33 pm
It all depends on his risk tolerance. If he’s young and not risk adverse, most of his money should go into the C, S, and/or I funds.
He has no issue with risk. I assume the funds mentioned would be equivalent to the funds cross-referenced here... viewtopic.php?f=10&t=150267

He's no longer in the Army, making periodic contributions. What reasons are there to not rollover into equivalents at Vanguard (for consolidation purposes)?
The G fund is a uniquely good deal (search the forum for "G fund free lunch" for more). Even if he doesn't need bonds now (or only allocates a very small portion to it), he should keep TSP open (I think minimum balance is 1K) so that he can use the G fund later (you can transfer 401k's/IRAs into TSP, even after leaving federal service, but you can't reopen a closed account). Many of us on this board use the G fund for the entire bond allocation of our overall portfolio.

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Re: Should I keep money in TSP long term?

Post by carol-brennan » Thu Feb 21, 2019 3:42 pm

02nz wrote:
Thu Feb 21, 2019 3:33 pm

The G fund is a uniquely good deal (search the forum for "G fund free lunch" for more). Even if he doesn't need bonds now (or only allocates a very small portion to it), he should keep TSP open (I think minimum balance is 1K) so that he can use the G fund later (you can transfer 401k's/IRAs into TSP, even after leaving federal service, but you can't reopen a closed account). Many of us on this board use the G fund for the entire bond allocation of our overall portfolio.
I love the G fund.

Shortly after I got a job w/ the Feds, I moved all of my retirement funds over to TSP. Haven't regretted that for a second.

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AstroJohn
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Re: Should I keep money in TSP long term?

Post by AstroJohn » Thu Feb 21, 2019 3:49 pm

UpperNwGuy wrote:
Thu Feb 21, 2019 3:20 pm
AstroJohn wrote:
Thu Feb 21, 2019 3:07 pm
carol-brennan wrote:
Thu Feb 21, 2019 3:03 pm
AstroJohn wrote:
Thu Feb 21, 2019 2:54 pm
Finally, I have always been somewhat annoyed/worried by TSPs statements that if someone manages to get access to your account and figure out a way to drain it, you are on your own. My guess is that Fidelity would make me whole.

Whoa. Those are pretty big assumptions on which to base a decision.
I was a highly-paid fed for a very long time. There is a lot of money involved. And I had a bad experience with my agency not backing me up on a government supplied credit card issue.
Any issue you had with your agency about a government credit card has nothing whatsoever to do with your TSP.
True. But it instilled in me a healthy disrespect for government bureaucracy. TSP is part of the government. As I said, concern about the possibility of the account being drained was only one issue. There is not doubt that the G Fund is one of the best things going. Consolidating made more sense to me. My wife and I "won" a long time ago, so there will be a lot of money flowing on to the children in the future and I want to try to make things as simple as possible. Everyone's situation is different.

02nz
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Re: Should I keep money in TSP long term?

Post by 02nz » Thu Feb 21, 2019 3:52 pm

AstroJohn wrote:
Thu Feb 21, 2019 3:49 pm
But it instilled in me a healthy disrespect for government bureaucracy. TSP is part of the government.
Yes TSP is run by a federal agency. And if every federal (and for that matter state and local) agency ran as effectively as the FRTIB, I'd be a very happy tax-payer. :sharebeer

Penguin
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Re: Should I keep money in TSP long term?

Post by Penguin » Thu Feb 21, 2019 4:08 pm

renegade06 wrote:
Thu Feb 21, 2019 11:07 am
Hello everyone! I was wondering if I should keep money is my TSP for the long term. I think the funds are pretty well diversified and the costs are low.

In speaking with my financial adviser, he was not a big fan of the TSP and thinks that I should consolidate my account outside of the TSP. I have about $150k in TSP, another $50k in a Traditional IRA with Vanguard and another $60k in my current company 401k plan. I am 43 years old.

Any thoughts you have on this would be appreciated. Thanks!
If you are living in North Carolina when you take your distribution and you started making contributions before August 12, 1989 then the distributions will be exempt from NC state income tax. This would not be true if you transferred the account to an IRA or another 401k.
I think there may be other states that offer state income tax exemptions to the TSP.

I doubt that you started working before August 12, 1989, but perhaps this exemption may be availabe to other readers. Or perhaps you may be eligible in another state that you live in when you take distributions. That state may have different eligibility rules.
Jon

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Watty
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Re: Should I keep money in TSP long term?

Post by Watty » Thu Feb 21, 2019 4:10 pm

fujiters wrote:
Thu Feb 21, 2019 1:41 pm
DrGoogle2017 wrote:
Thu Feb 21, 2019 11:39 am
Good thread, I’m debating whether to close my husband’s TSP or not. I left it open just in case I change my mind.
If this this an inherited TSP, know that if you die while still holding the account in the TSP, your heirs will not be able to continue holding the account in the TSP, nor can they roll it into an IRA, which could lead to a large tax event for them. If you're holding a beneficiary participant account, I'd roll it into an IRA.

https://m.govexec.com/pay-benefits/reti ... are/63611/

For a regular TSP account holder, definitely keep the money in there for all the aforementioned reasons (low fees, uniquely attractive G Fund).
+1

There is a wiki on this.

https://www.bogleheads.org/wiki/TSP_estate_planning

There was a post awhile back where someone had run into this situation.

1) Dad had a large TSP, he died and left it to his wife.
2) Wife was fine as a beneficiary participant.
3) A few years later the wife died and left it to their kid.

The kid could not roll it out to an IRA or leave it in the TSP so they had to withdraw the money from the TSP. Then were all in a high tax bracket so they ended up in a very high tax bracket. It sounded like they could have avoided a six figure tax bill if either of the parents had rolled the money the money out to an IRA that they could have inherited. As I recall they also felt sad the the dad had who had prided himself in being a good planner had made that mistake.

02nz
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Re: Should I keep money in TSP long term?

Post by 02nz » Thu Feb 21, 2019 4:21 pm

Spirit Rider wrote:
Thu Feb 21, 2019 12:03 pm
The TSP has distribution restrictions making it less than ideal in the withdrawal phase. However, as @Bronko pointed out that is all going away on 9/15/19 and there will be no good reason to rollover TSP assets to an IRA even in the withdrawal phase.

If you want to see your advisor's motivations, just tell him not only are you not rolling over the TSP to an IRA, you are rolling over the IRA to either the TSP of your current 401k. Watch their head explode as they try to use standard sales psychology to convince you otherwise. How else are they going to pay for their kids college education.
More details on the withdrawal changes, for folks who haven't been following this closely:

https://www.tsp.gov/PDF/formspubs/tspfs10.pdf

delamer
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Re: Should I keep money in TSP long term?

Post by delamer » Thu Feb 21, 2019 4:50 pm

Johnsson wrote:
Thu Feb 21, 2019 2:43 pm
delamer wrote:
Thu Feb 21, 2019 2:33 pm
It all depends on his risk tolerance. If he’s young and not risk adverse, most of his money should go into the C, S, and/or I funds.
He has no issue with risk. I assume the funds mentioned would be equivalent to the funds cross-referenced here... viewtopic.php?f=10&t=150267

He's no longer in the Army, making periodic contributions. What reasons are there to not rollover into equivalents at Vanguard (for consolidation purposes)?
The principal reasons are the rock bottom fees and access to the G fund, which is a great, no risk investment.

Also, future tax-deferred investments that he makes could be rolled over into the TSP.

But, as already mentioned, he could keep a small balance in the TSP to keep that option open. But if he rolls over his whole balance to Vanguard, that closes off the TSP option.

rkhusky
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Re: Should I keep money in TSP long term?

Post by rkhusky » Thu Feb 21, 2019 7:29 pm

Spirit Rider wrote:
Thu Feb 21, 2019 12:03 pm
The TSP has distribution restrictions making it less than ideal in the withdrawal phase. However, as @Bronko pointed out that is all going away on 9/15/19 and there will be no good reason to rollover TSP assets to an IRA even in the withdrawal phase.
Unless you want to do Roth conversions, which is not allowed in the TSP.

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Re: Should I keep money in TSP long term?

Post by Spirit Rider » Thu Feb 21, 2019 11:10 pm

rkhusky wrote:
Thu Feb 21, 2019 7:29 pm
Spirit Rider wrote:
Thu Feb 21, 2019 12:03 pm
The TSP has distribution restrictions making it less than ideal in the withdrawal phase. However, as @Bronko pointed out that is all going away on 9/15/19 and there will be no good reason to rollover TSP assets to an IRA even in the withdrawal phase.
Unless you want to do Roth conversions, which is not allowed in the TSP.
Once the new provisions are in place, you can do unlimited partial distributions. You will be able to do direct rollovers from traditional 401k accounts to a Roth IRA.

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