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07-23-2010, 08:47 AM
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#1
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Confused about dryer sheets
Join Date: Jul 2010
Location: Jacksonville
Posts: 3
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IRA vs TSP
I am new to the forum and I wanted to seek your opinions on a question I have. I am a retired military veteran so I am collecting retired pay. I am so thankful that I did my 20 years and now I can go on to my second career.
After retiring, I worked 4 years as a contractor and contributed to the company’s 401k plan. I was able to save $ 28k when I was hired for a civil service position. I am currently investing 10% of my pay into the Thrift Savings Plan, TSP.
I was unsure what to do with the money that was in my former company’s retirement plan so I went with to a financial advisor who rolled the 401k into a managed IRA account along with 2 other IRAs.
I’m debating if I should continue to have the IRA account where I am not contributing any money towards and seeing slow growth or if I should roll the IRA into my TSP. I brought this up with the financial planner and as you can expect, he was against moving any money because he has more options on how the money can be invested than TSP offers. I have to somewhat agree, but I still wonder if I am better off moving the money over.
Any thoughts would be appreciated.
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07-23-2010, 09:03 AM
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#2
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Thinks s/he gets paid by the post
Join Date: Jul 2003
Location: Pasadena CA
Posts: 3,346
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How has the IRA performed? The TSP is particularly good in having low fees and good index options and the G Fund. It does not have everything, I have 1/3 of my assets in an IRA to hold things like REITs, foreign bonds and some other stocks I like. IMHO, I would use the TSP as the core of a portfolio and only add things the TSP does not have.
Just my 2 cents, but its what I do. I rolled two IRAs into the TSP to get the bulk of my funds there.
__________________
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Old men ought to be explorers
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07-23-2010, 09:04 AM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2005
Location: North Oregon Coast
Posts: 16,483
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The main advantages to TSP are rock bottom expenses and access to the G fund which provides a "safe" yield that can't be matched anywhere else. The disadvantage is a limited number of investment options compared to the TSP. IMO, it's a question of whether you feel the advantages outweigh the disadvantage. Frankly if you are an investor who simply maintains an asset allocation with "mainstream" indexes, the TSP is fine.
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07-23-2010, 09:07 AM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2007
Posts: 5,596
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One of the most attractive aspects of the TSP is the low fees. Also, it's hard to beat the G fund for your "safe" money. The G fund averaged 3.22% the past 12 months and had an annual rate of return of 2.90% in June 2010. You'd have to lock in for years to get this rate in a CD.
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07-23-2010, 09:13 AM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2006
Posts: 12,483
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I'd go with the TSP. Most folks out there can't get at those funds, they are low cost and well managed. If you want to build a Roth IRA outside of that, take a look at that.........
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07-23-2010, 10:15 AM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2004
Location: SW Ohio
Posts: 14,404
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I agree with the approach taken by yakers. The TSP is a great (cheap!) place to put your "mainstream" holdings, and you can put your more "exotic" assets (if you really need any) in an IRA or in a corporate 401K (if they are offered there).
Look at the expenses you are presently paying, including any money you are paying to the FA for his advice, and I think this question will answer itself.
You were smart to set up the TSP while on active duty. You can't set up a new TSP account as a retiree (but you can make new contributions).
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07-23-2010, 11:21 AM
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#7
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Confused about dryer sheets
Join Date: Jul 2010
Location: Jacksonville
Posts: 3
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Thanks for the feedback. It confirms what I was thinking makes sense. I will need to look at the return rate that I am getting and compare. Thanks again
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07-23-2010, 12:13 PM
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#8
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2004
Location: SW Ohio
Posts: 14,404
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Quote:
Originally Posted by ascott
I will need to look at the return rate that I am getting and compare.
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The return rate probably won't tell you anything significant. The overall rate of return depend on a large number of factors (especially the particular asset classes in which you are invested, the recent performance of those asset classes, the degree of risk assumed, etc).
Bottom line: The TSP offers >>plenty<< of choices for most investors, and you can get anything else you might feel you need in other accounts. Look at the total costs of the investments and you'll probably choose the TSP for a big chunk of your dough. Investment returns can be highly volatile, but every penny you pay in expenses comes right out of your pocket. It's a predictable "loss" you can and should seek to minimize.
Good luck.
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07-23-2010, 12:33 PM
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#9
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Thinks s/he gets paid by the post
Join Date: Jul 2007
Posts: 3,229
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Recently went through the same decision you're facing and decided to consolidate my two IRA accounts into my TSP. One thing to consider is that once the money is in your TSP you will not be able to move it out while you're still working so make sure the TSP meets your needs. The funds offered by the TSP more than meets my needs and you won't find lower fees.
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07-23-2010, 08:23 PM
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#10
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Confused about dryer sheets
Join Date: Jul 2010
Location: Jacksonville
Posts: 3
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Zinger1457, good point. I am "planning" on staying civil service until I reach retirement age so for right now, I will TSP will meet my needs and will be my primary place for investing. Thanks to everyone for the advice
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07-24-2010, 07:15 AM
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#11
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2006
Location: Washington, DC
Posts: 11,327
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I rolled my IRA into my TSP account. As rates dropped over the past couple of years, I moved everything in the TSP to the G Fund - government bonds. That serves as my multi-year "cash" bucket.
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