TSP to Vanguard?

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SquawkIdent
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Re: TSP to Vanguard?

Post by SquawkIdent » Wed Jul 20, 2016 2:23 pm

MichDad wrote:
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


I agree with everything you said. The TSP is a 401K with great fees, mediocre fund selection and rebalancing rules and terrible withdrawal requirements. Adding the Roth TSP into the mix made those shortcomings even more frustrating. They wonder why people leave the TSP in droves once they retire? It seems they are out of touch and know little about the industry if that is occurring (and it is). I have written countless letters addressing these issues and have gotten zero response. It's obvious to me that they rule the TSP like they want it run not how the participants want it run. Look how long it took to get the Roth portion of it going. Years and mutual fund families had things up and running in a matter of days/months once the legislation was passed.

Your workaround as described in another post is a good one, IMHO. I plan to do it once retired. It's a shame, I would be very willing to keep my money in the TSP once retired if they would allow TSP conversions to the Roth and open up those withdrawal rules within the plan. :sharebeer

Engineer250
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Re: TSP to Vanguard?

Post by Engineer250 » Wed Jul 20, 2016 2:28 pm

MichDad wrote:
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


Isn't that normal though? My former workplace had a 401k and then opened a Roth 401k. I don't think they allowed transfers between the two.

I'm guessing you'll hear few complaints about the lack of ability to convert. Granted the population in the TSP is aging, but as the population gets younger and younger after people retire, most have had access to a Roth TSP early on.

The limits on withdrawal options are probably my biggest beef. The fact that any withdrawals have to come out proportionally between the two, and the limits on the sort of "two" lifetime withdrawals you can do.

Secondary consideration might be a lack of emerging markets, but I wonder if that's to avoid the US Govt investing in China or something like that. I can handle most of the other problems, hopefully they allow for more flexible withdrawals in about 30 years.
Where the tides of fortune take us, no man can know.

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SquawkIdent
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Re: TSP to Vanguard?

Post by SquawkIdent » Wed Jul 20, 2016 2:38 pm

Engineer250 wrote:
MichDad wrote:
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


Isn't that normal though? My former workplace had a 401k and then opened a Roth 401k. I don't think they allowed transfers between the two.

I'm guessing you'll hear few complaints about the lack of ability to convert. Granted the population in the TSP is aging, but as the population gets younger and younger after people retire, most have had access to a Roth TSP early on.

The limits on withdrawal options are probably my biggest beef. The fact that any withdrawals have to come out proportionally between the two, and the limits on the sort of "two" lifetime withdrawals you can do.

Secondary consideration might be a lack of emerging markets, but I wonder if that's to avoid the US Govt investing in China or something like that. I can handle most of the other problems, hopefully they allow for more flexible withdrawals in about 30 years.



Two things I see here are:

1. They want you to contribute to the TSP (and beg you to repeatedly) during your working career but when it comes time to withdraw those funds, they set the rules as to what you can do with your own money.

2. They have stressed that less fund selection is better for the participants. Again, if you don't agree with that it's time to move on after retirement. And lots of folks are doing just that.

They have not addressed any areas which cause folks to move on after retirement. Or do the "work around".

MichDad
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Re: TSP to Vanguard?

Post by MichDad » Wed Jul 20, 2016 2:43 pm

Engineer250 wrote:
MichDad wrote:
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


Isn't that normal though? My former workplace had a 401k and then opened a Roth 401k. I don't think they allowed transfers between the two.


My wife is in the private sector. She has two 401(k) plans with two separate employers, one with Fidelity and one with Schwab. Both her plans allow in-plan conversions from her regular 401(k) assets to Roth 401(k) assets. That's the only experience we have.

MichDad

Engineer250
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Re: TSP to Vanguard?

Post by Engineer250 » Wed Jul 20, 2016 3:12 pm

SquawkIdent wrote:Two things I see here are:

1. They want you to contribute to the TSP (and beg you to repeatedly) during your working career but when it comes time to withdraw those funds, they set the rules as to what you can do with your own money.

2. They have stressed that less fund selection is better for the participants. Again, if you don't agree with that it's time to move on after retirement. And lots of folks are doing just that.

They have not addressed any areas which cause folks to move on after retirement. Or do the "work around".


In answer to your points...

1) I haven't seen this as much as you. Granted they do auto-enroll you now for 3%. A lot of the older guys I work with didn't even know about the TSP when it was first started. And they did not used to auto enroll you. They do offer retirement training around here but it's hard to get since they prioritize the old folks. I got more retirement training at my last private sector job. If you see a focus on retirement in federal government I think it is a consequence of lower paying and less exciting jobs. People weigh the benefits and the stability against leaving for more money, therefore they are likely to focus on one of the key benefits they have (retirement). I disagree it is a conspiracy to keep money in the TSP. Consider that the TSP is guided by Federal Regulations and an executive branch review board that administers it. Any changes probably have to be individually approved by all the federal branches that use the TSP as well as, since it's quasi-public, a period in which proposals are opened up for public comment. (The only thing that saves us from the bureaucracy is the bureaucracy?)

2) I actually agree less fund selection is better for the participants. TSP has 5 funds in additional to target date funds. My last 401k had something like 8 or 9, and it wasn't much better. You can approximate the 5 funds as VOO (S&P 500), VXF (Extended Market, captures what's not in the 500), VEA (developed market), BND (total US bond market), and the G Fund as VGSH (treasuries). Except the actual G fund has returned ~2% in the last year compared to VGSH at 1.24%. Because the G fund is an artificially created mechanism. If you had a Vanguard 401k that had those 5 funds and some target retirement accounts, unlikely you'd consider them limited. Especially not if the expense ratios were half or less of the best/cheapest funds at Vanguard. Ted Benna, father of the 401k, thinks 401ks are too complicated these days and that's what's tripping up a lot of Americans. Obviously Warren Buffet and Jack Bogle favor plans that provide affordable indexes that grab the whole market. Since neither of those guys thinks you even need to invest in international, I doubt they'd see it as a weakness that the TSP doesn't have emerging markets (or Canada! poor Canada!). I suspect it's more a government regulation type thing that keeps emerging markets out of the TSP.

Many people move their 401k away from their former employer every time they leave. The only weirdness of the TSP is the shear quantity of people in it and the fact that so many of those people have been with one employer for 20 or 30 years. As far as I can tell it's self sustaining without any problems, I doubt there is a big issue of anyone at the top trying to "keep" people in it after they retire. Possibly there is a bigger push to get younger people in it, but that might be an effort to keep participation high, keep fees low, and just in general to keep people to stay with the fed by overselling the benefits available. Also, as FERS gets hacked apart every few years by congress, TSP becomes a more important part of that "three legged stool".
Where the tides of fortune take us, no man can know.

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SquawkIdent
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Re: TSP to Vanguard?

Post by SquawkIdent » Wed Jul 20, 2016 3:33 pm

Engineer250 wrote:
SquawkIdent wrote:Two things I see here are:

1. They want you to contribute to the TSP (and beg you to repeatedly) during your working career but when it comes time to withdraw those funds, they set the rules as to what you can do with your own money.

2. They have stressed that less fund selection is better for the participants. Again, if you don't agree with that it's time to move on after retirement. And lots of folks are doing just that.

They have not addressed any areas which cause folks to move on after retirement. Or do the "work around".


In answer to your points...

1) I haven't seen this as much as you. Granted they do auto-enroll you now for 3%. A lot of the older guys I work with didn't even know about the TSP when it was first started. And they did not used to auto enroll you. They do offer retirement training around here but it's hard to get since they prioritize the old folks. I got more retirement training at my last private sector job. If you see a focus on retirement in federal government I think it is a consequence of lower paying and less exciting jobs. People weigh the benefits and the stability against leaving for more money, therefore they are likely to focus on one of the key benefits they have (retirement). I disagree it is a conspiracy to keep money in the TSP. Consider that the TSP is guided by Federal Regulations and an executive branch review board that administers it. Any changes probably have to be individually approved by all the federal branches that use the TSP as well as, since it's quasi-public, a period in which proposals are opened up for public comment. (The only thing that saves us from the bureaucracy is the bureaucracy?)

2) I actually agree less fund selection is better for the participants. TSP has 5 funds in additional to target date funds. My last 401k had something like 8 or 9, and it wasn't much better. You can approximate the 5 funds as VOO (S&P 500), VXF (Extended Market, captures what's not in the 500), VEA (developed market), BND (total US bond market), and the G Fund as VGSH (treasuries). Except the actual G fund has returned ~2% in the last year compared to VGSH at 1.24%. Because the G fund is an artificially created mechanism. If you had a Vanguard 401k that had those 5 funds and some target retirement accounts, unlikely you'd consider them limited. Especially not if the expense ratios were half or less of the best/cheapest funds at Vanguard. Ted Benna, father of the 401k, thinks 401ks are too complicated these days and that's what's tripping up a lot of Americans. Obviously Warren Buffet and Jack Bogle favor plans that provide affordable indexes that grab the whole market. Since neither of those guys thinks you even need to invest in international, I doubt they'd see it as a weakness that the TSP doesn't have emerging markets (or Canada! poor Canada!). I suspect it's more a government regulation type thing that keeps emerging markets out of the TSP.

Many people move their 401k away from their former employer every time they leave. The only weirdness of the TSP is the shear quantity of people in it and the fact that so many of those people have been with one employer for 20 or 30 years. As far as I can tell it's self sustaining without any problems, I doubt there is a big issue of anyone at the top trying to "keep" people in it after they retire. Possibly there is a bigger push to get younger people in it, but that might be an effort to keep participation high, keep fees low, and just in general to keep people to stay with the fed by overselling the benefits available. Also, as FERS gets hacked apart every few years by congress, TSP becomes a more important part of that "three legged stool".


The main points I was trying to make were ones I've seen in many years dealing with the TSP, their literature they send out to participants and post on their website.

You can argue the fund selection that they offer forever and which is "best". I personally would like to see more choices. With proper education, it could be a bonus for most investors. But, I think the TSP wants to keep it simple and there is some merit to that given the fact that they don't give much advice on the program.

There is a big issue with trying to keep folks with the TSP after retirement. Literature they put out in the last few years proves that. And the facts they have presented do too. People are leaving in droves because of the exact issues that have been presented in this and other threads. It's a shame but the "work around" is an answer to those problems. Very few people I know and work with plan to keep it in the TSP once retired because of the limitations.

I am in full agreement the TSP is a very, very good program. With only a couple little changes it could be great IMHO and my money would never leave it. Let's see what the future holds.

delamer
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Re: TSP to Vanguard?

Post by delamer » Wed Jul 20, 2016 3:50 pm

Private sector plans sometimes have the same restrictions as the TSP in terms of withdrawals. My understanding is that it is a way to keep costs down.

Too many people are binary about the TSP. It isn't as if you have to either leave all your money in it when you retire or take all of your money out. If you want more flexibility or investment options, then rollover a portion of your TSP funds into an IRA. Leave the rest in the TSP to take advantage of the very low fees. And you can always roll the IRA money back in later.

It is fine to advocate for changes in how the TSP is administered. However, when you contribute you know what the restrictions are and you should plan assuming that there will be no changes.

Engineer250
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Re: TSP to Vanguard?

Post by Engineer250 » Wed Jul 20, 2016 3:51 pm

SquawkIdent wrote:
You can argue the fund selection that they offer forever and which is "best". I personally would like to see more choices. With proper education, it could be a bonus for most investors. But, I think the TSP wants to keep it simple and there is some merit to that given the fact that they don't give much advice on the program.


Since a Target Date Retirement fund is probably sufficient for 99% of investors, I think their fund selection is just fine. Given that some huge percent of investors are in all/mostly the G fund (some article I just found says 34% of assets are in the G Fund) that tells me most people's problem isn't that the fund doesn't include emerging markets or international small cap or REIT or gold or whatever. The slice and dicer can get these pretty easy in IRA assets outside of the TSP. They do offer full day and multi-day retirement training, paid, so that's more than most companies can say.

SquawkIdent wrote: There is a big issue with trying to keep folks with the TSP after retirement. Literature they put out in the last few years proves that. And the facts they have presented do too. People are leaving in droves because of the exact issues that have been presented in this and other threads. It's a shame but the "work around" is an answer to those problems. Very few people I know and work with plan to keep it in the TSP once retired because of the limitations.


You'll have to link me to this literature as I am a fairly new federal employee so haven't been reading about the TSP for years. Given their expense ratios are cheaper than anything else out there, and only some very broad based indices at a few brokerages even come close, and you can never have access to the G Fund after you leave...why would we assume their concerns are selfish to the program and not what they feel might be in the best interest of most people? Since TSP assets grew almost 20 million between 2014 and 2015, that doesn't sound like people leaving in droves.
Where the tides of fortune take us, no man can know.

retiredjg
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Re: TSP to Vanguard?

Post by retiredjg » Wed Jul 20, 2016 5:00 pm

SquawkIdent wrote:I am in full agreement the TSP is a very, very good program. With only a couple little changes it could be great IMHO and my money would never leave it. Let's see what the future holds.


I think that is the problem. The "couple of little changes" will likely be very expensive. Imagine the staff required to manage the hundreds of thousands of requests of the entire retired federal work force. That would certainly drive up costs, although I feel sure the costs would still be in keeping with Vanguard which is also not for profit.

You can have low cost or you can have full service. People who want full service can move part or all of their money. People who want low cost should have that option left open for them

I'm not unhappy with the choices the Board has made. My TSP money is cooking along practically for free. My Vanguard money is full service and costs a little more. I don't see this as a problem at all.

trueblueky
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Re: TSP to Vanguard?

Post by trueblueky » Wed Jul 20, 2016 7:02 pm

retiredjg wrote: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.

When I run the numbers, immediateannuities.com shows slightly more than TSP for a 70-year-old male and slightly less for a female. TSP doesn't ask gender or state, while immediate annuities does.

mdshumaker
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Re: TSP to Vanguard?

Post by mdshumaker » Fri Jul 22, 2016 9:46 am

retiredjg wrote: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.


Thank you for your post. I'm new to Bogleheads so will consider starting new post with questions. You make some good points and I will consider that especially since my husband will be working another 5 years after I retire, I may not need to tap the TSP right away.

retiredjg
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Re: TSP to Vanguard?

Post by retiredjg » Fri Jul 22, 2016 9:58 am

If your husband will continue working, that's even more reason to believe you will not need to annuitize or start payments from your TSP money any time soon.

There is no rush to make a decision on this. It may be many years before you need this money, if ever. Put the decision off until you actually need it.

If you decide to post more information, see the link at the bottom of this message for how to ask portfolio questions. Of course, not every question you ask will require all this information. But sometimes even simple questions require more than you might expect.

jpdion
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Re: TSP to Vanguard?

Post by jpdion » Mon Jul 25, 2016 12:56 pm

I retired in January 2015 from the Federal Government. I chose to transfer 100% of my TSP into a diversified set of Vanguard index funds. For me, the TSP was a great vehicle for accumulating assets, but I viewed the withdrawal options as restrictive and over-controlled. Further, I do not wish to to expose my portfolio to Congressional meddling, for example there are some in Congress who believe the G Fund is overgenerous to employees and want to reduce the return. In addition, when the debate over whether to extend the debt limit gets hot an heavy and government shut downs are threatened and occur, the G Fund can get caught up in all that by being frozen or borrowed from to tide the government over. I just don't want that kind of direct political risk attached to my investment portfolio. Besides, Admiral share ERs are very close to TSP ERs and, to me, worth the difference in withdrawal and reallocation flexibility. Just my opinion.

Paul47
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Re: TSP to Vanguard?

Post by Paul47 » Mon Jul 25, 2016 3:35 pm

Engineer250 and TimeRunner identified some of the problems with getting money out of TSP. When I retired, I wanted a chunk of money to pay off a RV so I put in a request for that money. I waited a few weeks and put in a request for X amount of money per month. I didn't know if I needed the monthly money but because of the way the rules were (per my understanding), I put in the request. TSP got the requests reversed so they couldn't give me the lump sum. I would have to wait for the next open season to change my monthly amount. Thus, I moved everything to an IRA where I have 100% choice on how and when to take money out. As I need it, I take a little money out for the cruise, trip to China, etc. I've also been taking a little money out each year to move to a Roth IRA but still keep my taxes as low as I can. I have to start a RMD in 2017. There is an easy to understand chart on the IRS website. Basically the first year, it is slightly less than 4% and increases slowly upward over the years. To keep things simple, I"ll take out my normal money for cruises etc and then round up the 4% requirement by moving money to the Roth. I should have started the Roth transfer as soon as I retired. Now I have an increasing IRA account which will require me to pay more in taxes when I take my money out. It is a problem but one I am glad to have. If you are a retired government employee with a pension, that money is guaranteed. To my way of thinking, that is my guaranteed income like the G fund. Thus, I have less of a need for guaranteed money that a bond fund (or G Fund) would provide. Thus, I'm still 100% in equitites. After 40 years of investing, I know things go up and down but I'm still way ahead of where I would be by putting my money in "safe" places. A friend of mine was more conservative. We started TSP at the same time. He went 50% C fund and 50% G fund. I went 100% C fund. At retirement, I had 30% more money than he had.

Engineer250
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Re: TSP to Vanguard?

Post by Engineer250 » Mon Jul 25, 2016 4:58 pm

Paul47 wrote:If you are a retired government employee with a pension, that money is guaranteed. To my way of thinking, that is my guaranteed income like the G fund. Thus, I have less of a need for guaranteed money that a bond fund (or G Fund) would provide. Thus, I'm still 100% in equitites. After 40 years of investing, I know things go up and down but I'm still way ahead of where I would be by putting my money in "safe" places. A friend of mine was more conservative. We started TSP at the same time. He went 50% C fund and 50% G fund. I went 100% C fund. At retirement, I had 30% more money than he had.


That's interesting, I have the opposite strategy. But I don't think I will stay with the government until retirement. I moved my former 401k into the TSP so that I would have access to the G fund with a decent pot of money around the time I retire, expecting that I probably won't stay here the whole time. I'll make one partial withdrawal of whatever I don't in the G-Fund, and then come back later for the rest of it. Assuming they don't improve withdrawal options sometime in the next 30 years and I don't have better options.
Where the tides of fortune take us, no man can know.

MichDad
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Re: TSP to Vanguard?

Post by MichDad » Tue Jul 26, 2016 11:04 am

Paul47 wrote:If you are a retired government employee with a pension, that money is guaranteed. To my way of thinking, that is my guaranteed income like the G fund. Thus, I have less of a need for guaranteed money that a bond fund (or G Fund) would provide. Thus, I'm still 100% in equitites. After 40 years of investing, I know things go up and down but I'm still way ahead of where I would be by putting my money in "safe" places. A friend of mine was more conservative. We started TSP at the same time. He went 50% C fund and 50% G fund. I went 100% C fund. At retirement, I had 30% more money than he had.


I've been investing very much like you, Paul. With the exception of the period in 1987 and 1988 when TSP participants were required to invest into the G Fund, I've never held assets in the G, F, or L Funds. All of my TSP investments have been into the C, I, and S Funds for about 28 years now. I've seen some big swings in my TSP account balance but it's never bothered me. Fortunately, the gains have far outweighed the losses. My current TSP balance is well over $1.4 million -- and I didn't invest at all for two years in the 1990s when I took a leave of absence. Like you, my colleagues who've kept a substantial portion in the G or F Funds have significantly lower TSP balances.

I've always felt that with the backstop of a decent FERS pension, plus Social Security benefits, I could take on the added risk of a widely-diversified US and international equities portfolio. I understand completely how many do not have the fortitude to stick with a portfolio such as mine, especially during times of big downturns.

MichDad

Paul47
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Re: TSP to Vanguard?

Post by Paul47 » Tue Jul 26, 2016 1:34 pm

MichDad, Good for you. When you are ready for retirement, you have a lot of options. I've grown to look at money not so much as a means to getting things but as the freedom to choose. I choose to live here, travel here, work or not to work, etc. If you don't have money, you have very few choices. It is sad to see some of my age group who didn't save and bought all the toys now struggling to make ends meet with the prospect that it will just get worse. For all you young ones out there, do what MichDad did. Retirement can be great. Paul

alisa4804
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Re: TSP to Vanguard?

Post by alisa4804 » Tue Jul 26, 2016 4:54 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?


Yes, this is what we are doing. I credit earlier feedback on this Boglehead forum from ChrisC, VictoriaF and MichDad in getting to this strategy; the TSP website certainly is not helpful on withdrawal strategies.

TimeRunner wrote:
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.


TimeRunner, this is absolutely brilliant! Thanks for sharing a great workaround for the TSP Roth balances. For those who are still planning their TSP withdrawal and Roth conversion strategy, this is a very smart approach!

DDT
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Re: TSP to Vanguard?

Post by DDT » Wed Dec 21, 2016 6:39 am

I'm a "newbie", so just came upon this forum. I started reading it, then jumped around,
but have not seen anyone mention that if you die with money in the TSP - TSP will automatically
deduct taxes and send the remainder to the beneficiariy (ies). In my case the taxes would be
significant and my beneficiary would loose a large amount... This is not true with Vanguard!
That is a very good reason to transfer to Vanguard (or company of your choice)!

retiredjg
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Re: TSP to Vanguard?

Post by retiredjg » Wed Dec 21, 2016 7:56 am

DDT wrote:I'm a "newbie", so just came upon this forum. I started reading it, then jumped around,
but have not seen anyone mention that if you die with money in the TSP - TSP will automatically
deduct taxes and send the remainder to the beneficiariy (ies). In my case the taxes would be
significant and my beneficiary would loose a large amount... This is not true with Vanguard!
That is a very good reason to transfer to Vanguard (or company of your choice)!

Hi newbie. Welcome to the forum. :happy

I think your information is only partially correct. You can leave your TSP to a beneficiary, no problem. It is the beneficiary's beneficiaries that are the problem.

Let's say you are married and your spouse is your beneficiary. You also have 2 kids (who are not beneficiaries). There is no problem there - DDT's Spouse can have and use the TSP account just like DDT used it.

However, if DDT's Spouse then dies, the TSP account does not pass to the kids. It is at that point that a distribution is made and taxes are taken out. It would have been better for DDT's Spouse to move the money to an IRA at another custodian and set up beneficiaries there. In that case, the IRA can pass to the kids.

fundseeker
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Re: TSP to Vanguard?

Post by fundseeker » Wed Dec 21, 2016 8:16 am

DDT wrote:I'm a "newbie", so just came upon this forum. I started reading it, then jumped around,
but have not seen anyone mention that if you die with money in the TSP - TSP will automatically
deduct taxes and send the remainder to the beneficiariy (ies). In my case the taxes would be
significant and my beneficiary would loose a large amount... This is not true with Vanguard!
That is a very good reason to transfer to Vanguard (or company of your choice)!


Welcome, but you did not find that information mentioned because it is incorrect! If you found that printed somewhere, we'd be interested in seeing it.

dan23
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Re: TSP to Vanguard?

Post by dan23 » Wed Dec 21, 2016 8:40 am

I'd be cautious about moving the money. TSP withdrawals are exempt from state tax in certain states (including NY). If you move TSP to Vanguard you lose that. My understanding is if a state does not tax its own pensions, it can't tax federal pensions or TSP (at least for FERS). This doc can help though you ultimately have to look it up in a state to be sure http://www.ncsl.org/documents/fiscal/St ... update.pdf.

DDT
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Re: TSP to Vanguard?

Post by DDT » Wed May 17, 2017 4:19 am

fundseeker wrote:Re: TSP to Vanguard?


The comment that "Upon TSP holders death, TSP monies would be taxed with the remainder sent to the beneficiary" was in a couple of the very early forum comments regarding 'why you don't want to keep money in the TSP after retirement'. I do not have a living spouse, so my daughter is the beneficiary. I'm glad to know to know the tax issue for beneficiaries is not accurate, however in my case, I need to set up a trust in my daughters name so she would receive so much per year. I'm not sure that is possible with TSP.
(Sorry for the delay in response - I had multiple issues that took my mind off TSP!)

selters
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Re: TSP to Vanguard?

Post by selters » Wed May 17, 2017 4:51 am

navyasw02 wrote:I have a friend who shifted to G during that week the market crumbled in 2008, then moved back when the dust settled.


What does that mean?

js2721
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Re: TSP to Vanguard?

Post by js2721 » Tue Oct 03, 2017 6:02 am

mhalley wrote:
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.
I am considering TSP to V because I wonder if the fed will impose some means testing on retirees ...I know they are looking at all possibilities to reduce the fed debt and the tsp could be a low hanging fruit for them.

Thus, tsp dollars rolled over to Vanguard would prevent the fed from imposing it's will on easy access to fed dollars (or their share of contributions).

This is my thought. Tell me what you think. Thank you.

Sam Pittsburgh

js2721
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Re: TSP to Vanguard?

Post by js2721 » Tue Oct 03, 2017 6:05 am

Ybsybs wrote:
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?
G fund is of little value as a retirement resource imo.....I prefer the C & S & I since it's long term.

retiredjg
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Re: TSP to Vanguard?

Post by retiredjg » Tue Oct 03, 2017 6:19 am

js2721 wrote:
Tue Oct 03, 2017 6:02 am
I am considering TSP to V because I wonder if the fed will impose some means testing on retirees ...I know they are looking at all possibilities to reduce the fed debt and the tsp could be a low hanging fruit for them.

Thus, tsp dollars rolled over to Vanguard would prevent the fed from imposing it's will on easy access to fed dollars (or their share of contributions).

This is my thought. Tell me what you think. Thank you.
Seems unlikely. I doubt our lawmakers would attempt to take anybody's 401k type account. I seriously doubt they would take their own.

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BeBH65
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Re: TSP to Vanguard?

Post by BeBH65 » Tue Oct 03, 2017 8:22 am

js2721 wrote:
Tue Oct 03, 2017 6:05 am
Ybsybs wrote:
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?
G fund is of little value as a retirement resource imo.....I prefer the C & S & I since it's long term.
Many of the people on this forum would love to have access to the TSP G-fund. From our wiki: Thrift_Savings_Plan#Funds and G_Fund
G Fund: a uniquely attractive bond fund that provides yields similar to an intermediate-term Treasury bond fund, but with the stability of principal of a money market fund, and no default risk.
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence).

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tadamsmar
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Re: TSP to Vanguard?

Post by tadamsmar » Tue Oct 03, 2017 8:33 am

abuss368 wrote:
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.
He inferred it. A move from TSP to Vanguard it typically not a good financial decision. But it's not extremely bad and there are some tradeoffs.

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tadamsmar
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Re: TSP to Vanguard?

Post by tadamsmar » Tue Oct 03, 2017 8:38 am

js2721 wrote:
Tue Oct 03, 2017 6:05 am
Ybsybs wrote:
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?
G fund is of little value as a retirement resource imo.....I prefer the C & S & I since it's long term.
You prefer no bond allocation ever?

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hoppy08520
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Re: TSP to Vanguard?

Post by hoppy08520 » Tue Oct 03, 2017 8:51 am

As someone who likes to keep my options open, I cannot imagine why you would close your TSP. It's not all or nothing - you don't have to keep all your money in the TSP. In spite of the various disadvantages of the TSP, there are many advantages including:
  • ERISA plans Employer retirement plans like the TSP could have better asset protection compared to IRA (see Asset protection - Bogleheads wiki)
  • If you want to keep your backdoor Roth IRA option open, and your current employer 401(k) plan is not a good plan, then you can transfer your traditional IRA money into the TSP
  • G Fund is better than comparable investment options like savings bonds, CDs, etc.
  • Expense ratios a bit lower than comparable retail investor funds
Even if you feel like you want to move money out of the TSP in order to invest differently or have better withdrawal options, I would not close our your TSP account in full. There's no downside to leaving your account open with a small balance (maybe $1,000 or whatever the minimum is) in case the TSP ever remedies its various problems, and then maybe one day in the future you can transfer some of your traditional IRA money back in.

Suppose in five or ten years, the TSP improves the withdrawal options, provides more fund options, allows in-plan Roth conversions, etc. At that point, the TSP will look even better than it does now and you might be wishing you had kept your account open.
Last edited by hoppy08520 on Wed Oct 04, 2017 9:21 am, edited 1 time in total.

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Re: TSP to Vanguard?

Post by kathyauburn » Tue Oct 03, 2017 10:00 am

tompillion wrote:
Fri May 13, 2016 3:04 pm
I retired two years ago from civil service, and have been debating moving my TSP to Vanguard
BAD idea! The TSP is the best thing going in the investment world.

Stop debating. Do something else.

kathyauburn
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Re: TSP to Vanguard?

Post by kathyauburn » Tue Oct 03, 2017 10:02 am

grabiner wrote:
Fri May 13, 2016 8:34 pm
The main reason to keep the TSP is the G fund.
That is indeed A reason, and a very good one. It is not the only one, however. The other reasons are the lowest fees in existence, the lowest fees in existence, and the lowest fees in existence.

rkhusky
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Re: TSP to Vanguard?

Post by rkhusky » Tue Oct 03, 2017 10:08 am

kathyauburn wrote:
Tue Oct 03, 2017 10:02 am
grabiner wrote:
Fri May 13, 2016 8:34 pm
The main reason to keep the TSP is the G fund.
That is indeed A reason, and a very good one. It is not the only one, however. The other reasons are the lowest fees in existence, the lowest fees in existence, and the lowest fees in existence.
The difference between the TSP and the lowest ER funds from Vanguard and Fidelity are inconsequential. Once you get down below a difference of 0.05% or so, it doesn't matter much anymore, unless you have more than $10M in your account and even then it's not likely to matter. Convenience, ease-of-use, reliability and safety become more important.

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Re: TSP to Vanguard?

Post by trueblueky » Tue Oct 03, 2017 11:05 am

hoppy08520 wrote:
Tue Oct 03, 2017 8:51 am
As someone who likes to keep my options open, I cannot imagine why you would close your TSP. It's not all or nothing - you don't have to keep all your money in the TSP. In spite of the various disadvantages of the TSP, there are many advantages including:
  • ERISA plans could have better asset protection compared to IRA (see Asset protection - Bogleheads wiki)
  • If you want to keep your backdoor Roth IRA option open, and your current employer 401(k) plan is not a good plan, then you can transfer your traditional IRA money into the TSP
  • G Fund is better than comparable investment options like savings bonds, CDs, etc.
  • Expense ratios a bit lower than comparable retail investor funds
Even if you feel like you want to move money out of the TSP in order to invest differently or have better withdrawal options, I would not close our your TSP account in full. There's no downside to leaving your account open with a small balance (maybe $1,000 or whatever the minimum is) in case the TSP ever remedies its various problems, and then maybe one day in the future you can transfer some of your traditional IRA money back in.

Suppose in five or ten years, the TSP improves the withdrawal options, provides more fund options, allows in-plan Roth conversions, etc. At that point, the TSP will look even better than it does now and you might be wishing you had kept your account open.
+1
For most people, TSP is the best accumulation system there is. Low cost, G Fund, extremely low chance of the provider going bankrupt (and if that happens, we have larger issues).

TSP is not the best distribution system available. We decided to transfer some to a tIRA in order to do Roth conversions. Whatever is left in tIRA when those are complete will go back to TSP.

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Re: TSP to Vanguard?

Post by mrc » Tue Oct 03, 2017 1:17 pm

kathyauburn wrote:
Tue Oct 03, 2017 10:02 am
That is indeed A reason, and a very good one. It is not the only one, however. The other reasons are the lowest fees in existence, the lowest fees in existence, and the lowest fees in existence.
Not any more ...

TSP ER: 0.038%
Vanguard TSM Institutional: 0.035% (less, but only $3/$100K/year).
Vanguard TBM Institutional: 0.040% (more, but only $2/$100K/year).

Not everyone has access to institutional funds, we do through a former employer. We hold Vanguard Inst through TIAA. Gets us the much more flexible withdrawal options.
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

WanderingDoc
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Re: TSP to Vanguard?

Post by WanderingDoc » Tue Oct 03, 2017 1:41 pm

SquawkIdent wrote:
Wed Jul 20, 2016 2:23 pm
MichDad wrote:
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
I agree with everything you said. The TSP is a 401K with great fees, mediocre fund selection and rebalancing rules and terrible withdrawal requirements. Adding the Roth TSP into the mix made those shortcomings even more frustrating. They wonder why people leave the TSP in droves once they retire? It seems they are out of touch and know little about the industry if that is occurring (and it is). I have written countless letters addressing these issues and have gotten zero response. It's obvious to me that they rule the TSP like they want it run not how the participants want it run. Look how long it took to get the Roth portion of it going. Years and mutual fund families had things up and running in a matter of days/months once the legislation was passed.

Your workaround as described in another post is a good one, IMHO. I plan to do it once retired. It's a shame, I would be very willing to keep my money in the TSP once retired if they would allow TSP conversions to the Roth and open up those withdrawal rules within the plan. :sharebeer
That's really disheartening. I just started again to make contributions to TSP, and was planning on maxing contributions 50% trad/50% Roth TSP.

I am in my early 30s and my real estate rental income already covers my basic expenses. I decided to try again with equities as a way to diversify. However, I don't need the money from any mutual funds or retirement accounts. But what you say has me concerned.

I will very likely retire by 40yo. Does that mean I won't have a legitimate way to access my traditional and Roth TSP funds without paying penalties?
One day it suddenly dawned on me that I had won the real estate lottery.

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Re: TSP to Vanguard?

Post by rkhusky » Tue Oct 03, 2017 1:53 pm

WanderingDoc wrote:
Tue Oct 03, 2017 1:41 pm
I will very likely retire by 40yo. Does that mean I won't have a legitimate way to access my traditional and Roth TSP funds without paying penalties?
You can access the funds without penalty. It is just more cumbersome than at commercial mutual fund companies. The government is generally very conservative regarding its processes and technology.

However, it is also cumbersome at commercial companies to access your traditional IRA funds before age 59.5.

rkhusky
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Re: TSP to Vanguard?

Post by rkhusky » Tue Oct 03, 2017 2:04 pm

Paul47 wrote:
Mon Jul 25, 2016 3:35 pm
A friend of mine was more conservative. We started TSP at the same time. He went 50% C fund and 50% G fund. I went 100% C fund. At retirement, I had 30% more money than he had.
That strategy happened to work because of the long bull market we've enjoyed. What was the portfolio comparison in 2009?

edit: Checked on Portfolio Visualizer - a 50/50 mix of VFINX/VBMFX would have returned the same as 100% VFINX from 1987 - 2009. By 2017, the all VFINX portfolio would have been 62% higher than the 50/50 portfolio.

If one started in 1997, there would have been parity in 2013, with the VFINX portfolio outpacing the 50/50 portfolio by 22% by 2017.

If one started in 2000, the 50/50 portfolio would still be ahead by 6% in 2017.

If one assumes equal annual contributions, then in the three cases (starting in 1987, 1997, 2000), the VFINX portfolio is ahead by (35%,18%,22%), respectively by 2017.
Last edited by rkhusky on Tue Oct 03, 2017 2:34 pm, edited 1 time in total.

thegoodlife
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Re: TSP to Vanguard?

Post by thegoodlife » Tue Oct 03, 2017 2:24 pm

hoppy08520 wrote:
Tue Oct 03, 2017 8:51 am
As someone who likes to keep my options open, I cannot imagine why you would close your TSP. It's not all or nothing - you don't have to keep all your money in the TSP. In spite of the various disadvantages of the TSP, there are many advantages including:
FWIW, TSP is not covered by ERISA.

delamer
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Re: TSP to Vanguard?

Post by delamer » Tue Oct 03, 2017 2:29 pm

js2721 wrote:
Tue Oct 03, 2017 6:02 am
mhalley wrote:
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.
I am considering TSP to V because I wonder if the fed will impose some means testing on retirees ...I know they are looking at all possibilities to reduce the fed debt and the tsp could be a low hanging fruit for them.

Thus, tsp dollars rolled over to Vanguard would prevent the fed from imposing it's will on easy access to fed dollars (or their share of contributions).

This is my thought. Tell me what you think. Thank you.

Sam Pittsburgh
Taking you at your word -- "tell me what you think" -- I think this is not worth putting on a list of top 100 reasons to leave the TSP.

DCChak
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Re: TSP to Vanguard?

Post by DCChak » Tue Oct 03, 2017 2:36 pm

The SEC gave a presentation today on Federal TSP retirement and withdrawal options that will be available at this website for the next 2 weeks - https://www.sec.gov/video/live/47037593 ... 100317.htm

js2721
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Re: TSP to Vanguard?

Post by js2721 » Tue Oct 03, 2017 3:46 pm

jpdion wrote:
Mon Jul 25, 2016 12:56 pm
I retired in January 2015 from the Federal Government. I chose to transfer 100% of my TSP into a diversified set of Vanguard index funds. For me, the TSP was a great vehicle for accumulating assets, but I viewed the withdrawal options as restrictive and over-controlled. Further, I do not wish to to expose my portfolio to Congressional meddling, for example there are some in Congress who believe the G Fund is overgenerous to employees and want to reduce the return. In addition, when the debate over whether to extend the debt limit gets hot an heavy and government shut downs are threatened and occur, the G Fund can get caught up in all that by being frozen or borrowed from to tide the government over. I just don't want that kind of direct political risk attached to my investment portfolio. Besides, Admiral share ERs are very close to TSP ERs and, to me, worth the difference in withdrawal and reallocation flexibility. Just my opinion.
How has the move to V from TSP gone for you? Are fees a factor or about the same? Thanks, Sam

Indexboss
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Re: TSP to Vanguard?

Post by Indexboss » Tue Oct 03, 2017 7:47 pm

I have a TSP and Vanguard account. The only reason I would switch is because of the withdrawal rules for the TSP. There is talk of them changing them. I personally do not plan on ever closing out my TSP.

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hoppy08520
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Re: TSP to Vanguard?

Post by hoppy08520 » Wed Oct 04, 2017 9:19 am

thegoodlife wrote:
Tue Oct 03, 2017 2:24 pm
hoppy08520 wrote:
Tue Oct 03, 2017 8:51 am
As someone who likes to keep my options open, I cannot imagine why you would close your TSP. It's not all or nothing - you don't have to keep all your money in the TSP. In spite of the various disadvantages of the TSP, there are many advantages including:
FWIW, TSP is not covered by ERISA.
You're right, thank you. I will correct my post. I do believe though that as an employer retirement plan, the TSP has the similar creditor protections as ERISA plans, which could make the TSP safer compared to IRAs. I've googled around on this and it's hard to find a solid source on this, though.

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tadamsmar
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Re: TSP to Vanguard?

Post by tadamsmar » Wed Oct 04, 2017 5:53 pm

hoppy08520 wrote:
Wed Oct 04, 2017 9:19 am
thegoodlife wrote:
Tue Oct 03, 2017 2:24 pm
hoppy08520 wrote:
Tue Oct 03, 2017 8:51 am
As someone who likes to keep my options open, I cannot imagine why you would close your TSP. It's not all or nothing - you don't have to keep all your money in the TSP. In spite of the various disadvantages of the TSP, there are many advantages including:
FWIW, TSP is not covered by ERISA.
You're right, thank you. I will correct my post. I do believe though that as an employer retirement plan, the TSP has the similar creditor protections as ERISA plans, which could make the TSP safer compared to IRAs. I've googled around on this and it's hard to find a solid source on this, though.
Here as good source on the differences.

https://www.ici.org/pdf/ppr_tsp.pdf

Also, TSP does not have the online fraud protection guarantee of Vanguard or any other private mutual fund company that I know of.

TSP is the only retirement fund that I know of where investors have had publicly reported unreimbursed losses due to a hack of their password or personal computer. But TSP did stop allowing online withdrawals after the hacks.

This has nothing to do with federal laws. Vanguard is not required by law to reimburse if your PC or login credential are hacked or stolen and Vanguard was not at at fault. The private firms just provide a limited guarantee because their customers are not a captive audience, I guess. They could not take the bad press that TSP got for making you totally responsible for your own online security.
Last edited by tadamsmar on Wed Oct 04, 2017 10:00 pm, edited 2 times in total.

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Re: TSP to Vanguard?

Post by Jerry55 » Wed Oct 04, 2017 7:00 pm

Indexboss wrote:
Tue Oct 03, 2017 7:47 pm
I have a TSP and Vanguard account. The only reason I would switch is because of the withdrawal rules for the TSP. There is talk of them changing them. I personally do not plan on ever closing out my TSP.

Agreed. I like the option of the G fund, or the L Income fund, and the ability to move into and out of those funds, or Vanguard.
It depends on ones circumstances. I'm retired via CSRS, so a steady stream of income, once I decide to do so in 8 years is a non-issue.
I'm interested in seeing what changes happen with TSP in the future. But I'm certainly not closing my TSP :happy
Retired 12/19/2012 @ age 57 | Good Bye Tension, Hello Pension !!!

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Re: TSP to Vanguard?

Post by rkhusky » Thu Oct 05, 2017 8:00 am

tadamsmar wrote:
Wed Oct 04, 2017 5:53 pm
This has nothing to do with federal laws. Vanguard is not required by law to reimburse if your PC or login credential are hacked or stolen and Vanguard was not at at fault. The private firms just provide a limited guarantee because their customers are not a captive audience, I guess. They could not take the bad press that TSP got for making you totally responsible for your own online security.
This is true of most government institutions. My bank will not guarantee timely delivery of paper checks to government organizations, such as for a water or tax bill. City, County or State entities don't care if the post office fails to deliver on time, they still charge the penalties. My city even writes on our water and tax bills that even if they misprint account information on the bill, we're responsible for catching the error. So, it's not a surprise that the TSP doesn't offer protections that private businesses provide.

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tadamsmar
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Re: TSP to Vanguard?

Post by tadamsmar » Thu Oct 05, 2017 4:00 pm

rkhusky wrote:
Thu Oct 05, 2017 8:00 am
tadamsmar wrote:
Wed Oct 04, 2017 5:53 pm
This has nothing to do with federal laws. Vanguard is not required by law to reimburse if your PC or login credential are hacked or stolen and Vanguard was not at at fault. The private firms just provide a limited guarantee because their customers are not a captive audience, I guess. They could not take the bad press that TSP got for making you totally responsible for your own online security.
This is true of most government institutions. My bank will not guarantee timely delivery of paper checks to government organizations, such as for a water or tax bill. City, County or State entities don't care if the post office fails to deliver on time, they still charge the penalties. My city even writes on our water and tax bills that even if they misprint account information on the bill, we're responsible for catching the error. So, it's not a surprise that the TSP doesn't offer protections that private businesses provide.
Just want to show everyone Vanguard's reimbursement policy:

https://personal.vanguard.com/us/help/S ... ontent.jsp

It's not a free lunch, but it's much better than a nothing-burger.

But my wife cannot do much from the online TSP account. That may vary by participant, there is a withdrawal option but it does not allow my wife to make online changes. But I am not sure online access is mostly harmless for all participants.

TSP does not support email or cell phone activity alerts, only snail mail.

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Re: TSP to Vanguard?

Post by jpdion » Sun Oct 08, 2017 9:48 am

js2721 wrote:
Tue Oct 03, 2017 3:46 pm
jpdion wrote:
Mon Jul 25, 2016 12:56 pm
I retired in January 2015 from the Federal Government. I chose to transfer 100% of my TSP into a diversified set of Vanguard index funds. For me, the TSP was a great vehicle for accumulating assets, but I viewed the withdrawal options as restrictive and over-controlled. Further, I do not wish to to expose my portfolio to Congressional meddling, for example there are some in Congress who believe the G Fund is overgenerous to employees and want to reduce the return. In addition, when the debate over whether to extend the debt limit gets hot an heavy and government shut downs are threatened and occur, the G Fund can get caught up in all that by being frozen or borrowed from to tide the government over. I just don't want that kind of direct political risk attached to my investment portfolio. Besides, Admiral share ERs are very close to TSP ERs and, to me, worth the difference in withdrawal and reallocation flexibility. Just my opinion.
How has the move to V from TSP gone for you? Are fees a factor or about the same? Thanks, Sam
Vanguard has proven to be a good move for me (and my wife). The ERs are close enough to the TSP to not be an issue -- ERs are much better than my wife's 401(k).

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