If you have spent years in federal service or the military, your Thrift Savings Plan (TSP) may be your largest retirement account. When you separate or retire, the same questions come up: should I move it, where, and what does it cost me? This guide covers the choices in plain English. It is general information; the TSP's own rules at tsp.gov always control.
- You can keep your money in the TSP if your vested balance is $200 or more, and leave it as long as you want, per tsp.gov.
- As a separated participant you can take a partial or total withdrawal, set up installments, or buy an annuity, per tsp.gov.
- Many payments can be rolled over to an IRA or eligible employer plan. Required minimum distributions cannot.
Your main choices after you separate
- Leave it in the TSP. You keep the plan's structure and can still move money between its funds. Nothing forces a decision.
- Roll it to a traditional IRA. This gives you a wider menu of investments and withdrawal choices, but the account is no longer in the TSP and you will pay whatever fees the IRA provider charges.
- Roll it to a new employer plan. If you take a job whose plan accepts rollovers, this can keep everything in one place.
- Take installments or a partial withdrawal. Money you take out is generally taxable income in the year you receive it, unless it is Roth money that meets the rules.
- Buy an annuity. The TSP offers an annuity option, and an annuity from an insurance company is another route. See the section below.
Direct vs. indirect rollovers: the 60-day rule
A direct rollover sends the money straight from the TSP to the new account. An indirect rollover pays you first, and you generally have 60 days to deposit it. According to TSP materials, the TSP withholds taxes on an indirect payment: on a $10,000 distribution, $2,000 is withheld and you receive $8,000, so rolling over the full $10,000 means covering the $2,000 yourself. A direct rollover avoids that problem, which is why most people choose it.
Traditional vs. Roth money
Your TSP may hold traditional (pre-tax) and Roth balances. The TSP accepts rollovers from traditional IRAs and eligible plans into the traditional balance, and Roth 401(k), 403(b) and 457(b) money into the Roth balance, but it does not accept money from a Roth IRA, per tsp.gov. Moving between traditional and Roth can create a tax bill, so talk to a tax professional first.
Required minimum distributions
Under current IRS rules, required minimum distributions begin at age 73 for people born from 1951 through 1959, and at 75 for those born in 1960 or later. An RMD cannot be rolled over, and missing one can trigger an excise tax. Ask the TSP or your tax professional how your own deadline works.
Weighing a TSP rollover?
Tell us what you have and what you want it to do. We will lay out the options and the tradeoffs. Free, no pressure.
Talk it through with a licensed agentWhere an annuity can (and can't) fit
Some retirees want part of their savings to produce income they cannot outlive. An annuity is one way to do that, and so is the TSP's own annuity. Before moving money, compare them carefully:
- Surrender charges. Many annuities charge a fee if you withdraw early. Ask for the schedule in writing.
- Fees and limits. Riders, caps and participation rates can reduce what you receive. Ask for every cost.
- Guarantees. They are backed by the issuing insurance company's claims-paying ability, not by the government.
- Liquidity. Money you move out of the TSP may be harder to reach later.
An annuity is not an investment in the stock market, and it is not right for everyone. See our guides on IRA rollovers into annuities and fixed indexed annuities, and our annuities page.
Questions to ask before you move TSP money
- What are all the annual fees in the new account, compared with the TSP?
- Will I lose any feature I value, such as the TSP's fund menu?
- Is this a direct rollover, and who completes the transfer paperwork?
- How will this affect my taxes this year and in future years?
- If an annuity is involved, what are the surrender charges, fees, and who stands behind the guarantee?
Availability and rules vary by state
Annuity products, rates, riders and consumer protections differ by state, and a given product may not be available in every state. Honorbrook is licensed in the 11 states below; which products we can offer you depends on what carriers sell in your state. Each state’s insurance regulator can verify an agent’s license and answer consumer questions.
- Virginia: Virginia Bureau of Insurance
- Maryland: Maryland Insurance Administration
- North Carolina: North Carolina Department of Insurance
- South Carolina: South Carolina Department of Insurance
- Georgia: Georgia Office of Insurance and Safety Fire Commissioner
- Alabama: Alabama Department of Insurance
- Louisiana: Louisiana Department of Insurance
- Texas: Texas Department of Insurance
- Michigan: Michigan Department of Insurance and Financial Services
- Indiana: Indiana Department of Insurance
- West Virginia: West Virginia Offices of the Insurance Commissioner
Roll-over rules for the TSP are federal. For product availability where you live, fill out our short form and a licensed agent will reach out.
How Honorbrook helps
We are an independent agency. We can walk through your options, including leaving the money where it is, and tell you plainly when moving it does not make sense. We do not offer every product, and you should compare with the TSP itself.
Guarantees are backed by the claims-paying ability of the issuing insurance company, not by any government agency. Annuities are not investments or bank products, may carry surrender charges, fees and limits, and suitability depends on the individual. This article is general information and is not tax, legal, investment or financial advice, and a licensed agent can help with your situation.