Roll IRA into TSP?

[jjquantz]

Hey gang, I went back and searched the archives and it appears that many Feds chose to roll their IRAs into their TSP accounts. A few chose to go the other way. DW and I are considering whether to move her IRA funds into her TSP account.

It appears that the situation can be summarized as:

Major advantages: 1) Simplicity, one less account to worry about, 2) Lower expenses in the TSP, and 3) If one were to buy an annuity (we're not planning on it, but the option is there), the TSP seems to be a good place to do so, price-wise.

Major disadvantages: 1) Fewer investment choices, and 2) a few more restrictions on how withdrawals can be made.

What else have we missed? Any strong opinions backed by reasoned arguments?

 

[Amethyst]

As long as the IRA started as pre-tax money, TSP will accept a rollover. I've done it. The TSP's expenses are famously low, You already have listed the disadvantages.

They can't accept after-tax IRA money.

Amethyst

 

[ziggy29]

Right now the main knock on TSP (and why many separated Feds pull their money out) is because of the restricted withdrawal rules, but there is significant traction to a plan to loosen those restrictions a bit (wanting to encourage people to keep their money there).

I have a Fido 401K from my last job and I'm considering transferring it to TSP now that I have become an unintentional (albeit part-time) "career" postal employee. Mostly inertia has stopped me. The Fido 401K has a lot of institutional funds with relatively low expenses, but nowhere near the 0.05% or less that TSP has. Also it would be nice to have access to the G fund for my cash allocation instead of a traditional money market fund basically earning zero.

As for after-tax money, TSP *will* accept rollovers of Roth 401K and Roth 403B plans, but not a Roth IRA.

https://www.tsp.gov/planparticipation/transfers/eligibility.shtml

 

[zinger1457]

Haven't looked at or priced annuities in a few years but when I did I found better deals on a SPIA than what the TSP (MetLife) was offering. As was mentioned if you're looking for a cash type fund it's hard to beat the G-Fund. I transferred a 401K from a previous job into my TSP while I was working. Also did a partial withdrawal from my TSP when I left federal service but left most of it there and will continue to use it until I need to start making withdrawals.

 

[Tadpole]

Speaking of TSP rules. I will be RMD age in four years. I haven't touched my TSP money yet. If I go into RMD without rolling the money over to some other place I know I will need to begin the yearly withdrawal based on the IRS longevity tables. Now, my question - If I begin withdrawing RMD amounts based on these tables, what options do I have for withdrawals or rollovers after that point?

 

[zinger1457]

Speaking of TSP rules. I will be RMD age in four years. I haven't touched my TSP money yet. If I go into RMD without rolling the money over to some other place I know I will need to begin the yearly withdrawal based on the IRS longevity tables. Now, my question - If I begin withdrawing RMD amounts based on these tables, what options do I have for withdrawals or rollovers after that point?

You can do a one time partial withdrawal but need to do it before you set up your plan above. You always have the option to do a full withdrawal (transfer to an IRA) at any time.

 

[yakers]

I rolled a couple outside IRAs into the TSP while working. When I retired I rolled part of the TSP into an outside IRA so I could capture other asset classes (REIT, foreign bonds) but also for flexible withdrawals. When I hit RMDs, if the rules don't change, I will have to take RMDs from the TSP and also the IRA but thats a first world problem.

 

[ronocnikral]

another advantage is if one cannot make direct roth contributions and desires to do a backdoor roth, but doesn't want to pay taxes on their rollover IRA while w*rking.

Not sure if this applies to TSP, but with 401k's which accept outside funds can have another advantage if one wants to retire after 55 and needs the sheltered money.

 

[RAE]

Yes, you have summarized the pros and cons of doing that pretty well. I transferred my IRA (at least the portion that qualified) to the TSP before I retired, and have no regrets. The limited withdrawal options are not a problem for me, as I just have a set amount withdrawn each month and sent to my checking account, which works well for me (I do not anticipate making large withdrawals from my TSP for any reason). The investment options are adequate, for what I need anyway. The low expenses of the TSP simply cannot be beat. And it simplifies things to have everything in one place, as you said. For all those reasons, I'm satisfied with the decision I made to transfer my IRA to my TSP.

 

[donheff]

I also transferred an old IRA to the TSP. I keep all TSP in the G Fund as DW's and my psuedo-cash bucket. If I have to liquidate equities in tax advantaged funds in a downturn I will balance it out with a move to equities in TSP. I plan to take RMDs out when I reach 70 leaving the remainder in G. If the TSP was a major portion of my portfolio I would probably make a partial withdrawal to an IRA before 70 leaving the remainder in G to serve as the portfolio cash component.