While you are working
How much, traditional or Roth, and which funds. The default for a new hire is rarely the right allocation for someone five years out, and lifecycle funds are a reasonable answer rather than an automatically correct one.
TSP guidance
What to do with the largest number on your statement. Contribution strategy while you are working, fund allocation as you approach the date, and the withdrawal options once you are out — including the ones that are irreversible.
The decisions that matter
As you approach your date
Sequence-of-returns risk is not an abstraction when you are drawing down within three years. This is where allocation stops being about growth and starts being about not being forced to sell at the wrong moment.
Once you are out
Installments, annuity purchase, partial withdrawals and rollovers each offer different flexibility and consequences for your survivors. Some are reversible. Some are not.
- Review your current balance and allocation against your actual retirement date
- Model what the TSP needs to produce alongside your annuity and Social Security
- Walk through every withdrawal option and how it works
- Flag the choices that cannot be undone before you make them
- Coordinate the TSP decision with FEGLI, survivor elections and your retirement date, because they are one decision
Common questions
Questions we answer every week
Should I roll my TSP into an IRA when I retire?
Sometimes, and the honest answer is that it depends on what you are trying to buy. The TSP’s expense ratios are among the lowest available anywhere, it offers the G Fund, which has no private-sector equivalent, and it carries federal creditor protections. An IRA offers a far wider range of choices, more flexible withdrawal mechanics, and easier estate planning for non-spouse beneficiaries.
Can I take money out of the TSP before 59½ without a penalty?
Sometimes, yes. If you separate from federal service in or after the year you turn 55, withdrawals from the TSP are generally not subject to the 10% early withdrawal penalty. For special provisions employees — law enforcement, firefighters, air traffic controllers — that threshold is generally the year you turn 50. Note that rolling the money to an IRA first can forfeit this treatment, which is one of the reasons the rollover question is worth slowing down over.
What happens to my TSP if I die?
It passes according to your TSP beneficiary designation, which overrides your will. A spouse beneficiary can generally keep the money in a beneficiary participant account within the TSP; non-spouse beneficiaries cannot. Designations are not updated automatically by a divorce, a remarriage or a death, which is why we check them at every review.
Traditional or Roth TSP?
Many people are best served by holding some of each, so that the drawing order is a choice rather than a constraint. The right balance depends on your career stage, existing balances and retirement income needs.
How do I change my TSP allocation?
Through your account at tsp.gov. It is worth understanding the difference between an interfund transfer, which moves the balance you already hold, and a contribution allocation, which only directs new money. Changing one and assuming you have changed both is a common and costly mistake.
Talk it through with someone who only does this
A benefit review covers this alongside everything else, because in practice it is never a standalone decision.
Book a No Cost Retirement Review
Related: Retirement benefit review · Retirement paperwork · FEGLI & survivor benefits