TSP rollover or not?

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Topic Author
aha
Posts: 149
Joined: Sat Nov 23, 2013 6:55 pm

TSP rollover or not?

Post by aha »

TSP expense ratio is 0.042% now. It's higher than VTSAX's 0.04%. Not a big deal at all but it's been going up. I'm tempted to move the Roth portion to Roth IRA. The main reason is actually to simplify life and account management. It just wasn't compelling enough to go through the paperwork. I may still keep the traditional portion there if I want the G fund someday and in case the expense ratio goes down to 0.02% someday I may want to roll IRA back into TSP. It's a very small portion of my portfolio and I'm no longer with fed. What are the other pros and cons that I may be missing?
Osprey
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Re: TSP rollover or not?

Post by Osprey »

I rolled my Roth out of tsp because tsp required the asset allocation to be the same for Roth and non Roth money and I wanted all Roth funds invested in stocks with no g fund for that portion.
lakpr
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Re: TSP rollover or not?

Post by lakpr »

Your post is unclear but the Roth TSP to Roth IRA is a one way street. You can never roll it back into TSP.

Make sure you keep a minimum of $5000 in the TSP, as the plan CAN kick you out for low balances. I am not saying they WILL kick you out, but they CAN. The $5000 is the IRS imposed limit.
gtd98765
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Re: TSP rollover or not?

Post by gtd98765 »

aha wrote: Fri Feb 07, 2020 1:51 am TSP expense ratio is 0.042% now. It's higher than VTSAX's 0.04%. Not a big deal at all but it's been going up. I'm tempted to move the Roth portion to Roth IRA. The main reason is actually to simplify life and account management. It just wasn't compelling enough to go through the paperwork. I may still keep the traditional portion there if I want the G fund someday and in case the expense ratio goes down to 0.02% someday I may want to roll IRA back into TSP. It's a very small portion of my portfolio and I'm no longer with fed. What are the other pros and cons that I may be missing?
The expense ratio difference between TSP and VTSAX using the numbers you describe amounts to $20 per million dollars per year. There are definitely some reasons to prefer an IRA to the TSP but expense ratio would not be at the top of the list for me.
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Wiggums
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Re: TSP rollover or not?

Post by Wiggums »

aha wrote: Fri Feb 07, 2020 1:51 am TSP expense ratio is 0.042% now. It's higher than VTSAX's 0.04%. Not a big deal at all but it's been going up. I'm tempted to move the Roth portion to Roth IRA. The main reason is actually to simplify life and account management. It just wasn't compelling enough to go through the paperwork. I may still keep the traditional portion there if I want the G fund someday and in case the expense ratio goes down to 0.02% someday I may want to roll IRA back into TSP. It's a very small portion of my portfolio and I'm no longer with fed. What are the other pros and cons that I may be missing?
The expense ration is insignificant. If you leave the tsp and close your account, you cannot get back in.
02nz
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Re: TSP rollover or not?

Post by 02nz »

lakpr wrote: Fri Feb 07, 2020 5:55 am Make sure you keep a minimum of $5000 in the TSP, as the plan CAN kick you out for low balances. I am not saying they WILL kick you out, but they CAN. The $5000 is the IRS imposed limit.
Do you have a source for this (TSP not IRS)? Everything I see says $200 is the minimum to keep your TSP account.

I did the same Roth TSP to Roth IRA rollover. I wouldn’t do it for the tiny difference in ER (If there is even one - Google “significant digits”) but rather for simplification and asset location purposes.
lakpr
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Re: TSP rollover or not?

Post by lakpr »

02nz wrote: Fri Feb 07, 2020 9:10 am
lakpr wrote: Fri Feb 07, 2020 5:55 am Make sure you keep a minimum of $5000 in the TSP, as the plan CAN kick you out for low balances. I am not saying they WILL kick you out, but they CAN. The $5000 is the IRS imposed limit.
Do you have a source for this (TSP not IRS)? Everything I see says $200 is the minimum to keep your TSP account.

I did the same Roth TSP to Roth IRA rollover. I wouldn’t do it for the tiny difference in ER (If there is even one - Google “significant digits”) but rather for simplification and asset location purposes.
No, I don't know if it is different with TSP, I just am repeating the IRS guidance and treating the TSP plan as another 401k plan.

https://www.irs.gov/retirement-plans/pl ... quirements
Involuntary cash-out of benefits. In certain circumstances, the plan administrator must obtain the participant's consent before making a distribution. Generally, consent is required if the participant's account balance exceeds $5,000. Depending on the type of benefit distribution provided for under the 401(k) plan, the plan may also require the consent of the participant's spouse before making a distribution. The plan may provide that rollovers from other plans are not included in determining whether the participant's account balance exceeds the $5,000 amount.
pahkcah
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Re: TSP rollover or not?

Post by pahkcah »

Per information provided by TSP in a footnote on page 2 of this document - https://www.tsp.gov/PDF/formspubs/tspbk02.pdf :

"Separated participants, if your vested account balance is less than $200 after your agency or service reports that you have left
service, your balance will be automatically paid directly to you in a single payment (i.e., cashout). You will not be allowed to
remain in the TSP. We will not withhold any amount for federal income tax on your cashout if all your withdrawals from the TSP
throughout the year of your cashout add up to less than $200. If your balance is less than $5.00 when you leave service, we will
automatically forfeit the balance to the Thrift Savings Plan. Your quarterly participant statement will indicate that the balance has
been forfeited. You can reclaim the forfeited amount by sending us a written request, but we will not credit earnings to the
account after the forfeiture date."

pahkcah
Topic Author
aha
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Joined: Sat Nov 23, 2013 6:55 pm

Re: TSP rollover or not?

Post by aha »

$200 traditional and Roth combined? What if you leave $200 and it drops in value later?
lexor
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Re: TSP rollover or not?

Post by lexor »

aha wrote: Fri Feb 07, 2020 1:51 am TSP expense ratio is 0.042% now. It's higher than VTSAX's 0.04%. Not a big deal at all but it's been going up. I'm tempted to move the Roth portion to Roth IRA. The main reason is actually to simplify life and account management. It just wasn't compelling enough to go through the paperwork. I may still keep the traditional portion there if I want the G fund someday and in case the expense ratio goes down to 0.02% someday I may want to roll IRA back into TSP. It's a very small portion of my portfolio and I'm no longer with fed. What are the other pros and cons that I may be missing?
I also have a TSP and I'm preferring to put money at Fidelity over the TSP when I can. TSP isn't bad but Fidelity is better IMO. TSP has a much better international fund than Vanguard for example.

You may lose creditor protection depending on the state in IRA instead of 401k if you care
“The miracle of compounding returns is overwhelmed by the tyranny of compounding costs.” -Mr. John C. Bogle
lakpr
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Re: TSP rollover or not?

Post by lakpr »

aha wrote: Sat Feb 08, 2020 2:21 am $200 traditional and Roth combined? What if you leave $200 and it drops in value later?
If you put that money in G fund, because of the unique waythe fund is constructed, you are guaranteed to not lose money
George Theo
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Joined: Fri Oct 16, 2015 5:30 pm

Re: TSP rollover or not?

Post by George Theo »

I withdrew all money from TSP, both Roth and regular 3 years ago. I was still employed and having money withdrawn from check. My account stayed open. 1-877-968-3778 is TSP Helpliine number. They would be able to answer questions.
Topic Author
aha
Posts: 149
Joined: Sat Nov 23, 2013 6:55 pm

Re: TSP rollover or not?

Post by aha »

I can only find instructions on rollovers and transfers *into* TSP.
https://www.tsp.gov/PlanningTools/Inves ... sfers.html

Do they call outbound rollover *withdrawal"? TSP-99 says "Withdrawals of Roth contributions are tax-free. The earnings associated with these contributions are also tax-free, but only if 5 years have passed since January 1 of the calendar year in which you made your first Roth contribution, and you have reached age 59½ or have a permanent disability." Does it mean earnings are NOT tax-free because I don't meet those criteria? So I can only withdraw after 59 1/2?
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