IRA into TSP?

[Tieky]

New poster, hello my name Tieky,

I am a federal employee with six years of service. I have an IRA that will be expiring this month ($24,000), and would like some thoughts on rolling this over into my TSP or rolling it over into another IRA for six months, OR rolling small bits of it into a ROTH.

I am 14 years from retiring and would like to hear what people see as a long term better decision.

Thanks in advance for your time and comments.

 

[gindie]

Tieky,

When you mention your IRA "expired" and an option is to roll it over for a fixed amount of time, I'm guessing your IRA is in some kind of CD at a bank or credit union.

I would find a discount broker (Vanguard and Fidelity are good ones) and open an account and place your IRA funds into some NO-LOAD mutual funds. Since you have 14 years until retirement, your potential for gain is larger than CD's.

 

[yakers]

While working I did transfer two IRAs into the TSP and I think it is a good place for most investing; very low expense index funds. But when I retired I transferred 1/3 of my TSP into an IRA to pick up some asset classes not included in the TSP, specifically REITs and foreign bonds. I also picked up some dividend paying stocks. The REITs & bonds have been the best part of my portfolio but overall it is now spread out the way I want and that is the most important thing. You could take your IRA and invest in asset classes not covered by the TSP but if this sounds too complicated then do use the TSP, you could do a lot worse.

 

[W2R]

I am a federal employee too, and have been contributing the maximum plus over 50 catch-up to the TSP every year. If I had been able to contribute more, I would have done so. If I had another IRA to roll over into the TSP, I would do it.

There are many reasons to like the TSP, but one reason why I like the TSP is access to the G Fund. Access to this government bond fund that is guaranteed to never lose value is part of your job benefits and the average person cannot invest in the G Fund. In retirement I can keep my TSP mostly in G Fund and take equal monthly payments, and this way the TSP can provide a predictable income source analogous to an additional pension.

 

[freebird5825]

I've never done the rollover option into the TSP, so no advice there. However I can comment on how it is run. I was a FERS employee and used the TSP for over 18 years. I was very satisfied with the administration and execution of the TSP and never had any bad experiences.
No mysteries, no drastic changes midstream. It delivered exactly what it said it would, at very low cost.

 

[donheff]

I rolled an IRA with about $100K into my TSP. There were a few forms to fill out but the process was pretty painless.

 

[Purron]

I am a federal employee too, and have been contributing the maximum plus over 50 catch-up to the TSP every year. If I had been able to contribute more, I would have done so. If I had another IRA to roll over into the TSP, I would do it.

There are many reasons to like the TSP, but one reason why I like the TSP is access to the G Fund. Access to this government bond fund that is guaranteed to never lose value is part of your job benefits and the average person cannot invest in the G Fund. In retirement I can keep my TSP mostly in G Fund and take equal monthly payments, and this way the TSP can provide a predictable income source analogous to an additional pension.

I like that G Fund too. The rate in July 2009 was 3.36% and it was 3.19% over the past 12 months. Pretty good return considering the low risk. Sure beats what most banks and credit unions are offering these days.

 

[Amethyst]

We can roll existing IRAs into our TSPs even if we're contributing the max from payroll already? This, I will have to investigate! Thanks for the hint.

 

[W2R]

i like that g fund too. The rate in july 2009 was 3.36% and it was 3.19% over the past 12 months. Pretty good return considering the low risk. Sure beats what most banks and credit unions are offering these days.

I agree, and recent performance is the worse that the G Fund has ever had relative to the cost of living. 2008 was the first year in which the G Fund yield did not exceed the CPI. While one's personal inflation rate may differ, this is still a pretty remarkable performance for something that is guaranteed never to decline in value.

year....| G-fund increase| CPI-U
1988| 8.81%| 4.10% 1989| 8.81%| 4.80% 1990| 8.90%| 5.40% 1991| 8.15%| 4.30% 1992| 7.23%| 2.90% 1993| 6.14%| 3.00% 1994| 7.22%| 2.60% 1995| 7.03%| 2.80% 1996| 6.76%| 3.00% 1997| 6.77%| 2.30% 1998| 5.74%| 1.60% 1999| 5.99%| 2.20% 2000| 6.42%| 3.40% 2001| 5.39%| 2.80% 2002| 5.00%| 1.60% 2003| 4.11%| 2.30% 2004| 4.30%| 2.70% 2005| 4.49%| 3.40% 2006| 4.93%| 3.20% 2007| 4.87%| 2.80% 2008| 3.75%| 3.80%

 

[Bimmerbill]

I rolled all my misc IRAs and old 401Ks into the TSP. One PITA was that your name and SSN had to be written on the check for the TSP to accept it. Several of my investment companies wouldn't print my SSN on it, so I had them mail it to me, then I wrote my SSN on it. Then mailed it to TSP.

Think its TSP form 60? You gotta get your old plan administrator to sign in a spot too, which was another PITA.

But its worth it. I'm a huge TSP fan. I look at the employment postings a lot, hoping to find a position there one day.

 

[stoutboy]

I still have at least 9 years to retirement and I'm maxing out TSP each year, but I will not put anything into the G fund until I'm ready to use the money. I'm doing a mix of C, S and I. For anyone with more than 5 years left until retirement, the G fund is the worst place in TSP for your money.

I agree, and recent performance is the worse that the G Fund has ever had relative to the cost of living. 2008 was the first year in which the G Fund yield did not exceed the CPI. While one's personal inflation rate may differ, this is still a pretty remarkable performance for something that is guaranteed never to decline in value.

year....| G-fund increase| CPI-U
1988| 8.81%| 4.10% 1989| 8.81%| 4.80% 1990| 8.90%| 5.40% 1991| 8.15%| 4.30% 1992| 7.23%| 2.90% 1993| 6.14%| 3.00% 1994| 7.22%| 2.60% 1995| 7.03%| 2.80% 1996| 6.76%| 3.00% 1997| 6.77%| 2.30% 1998| 5.74%| 1.60% 1999| 5.99%| 2.20% 2000| 6.42%| 3.40% 2001| 5.39%| 2.80% 2002| 5.00%| 1.60% 2003| 4.11%| 2.30% 2004| 4.30%| 2.70% 2005| 4.49%| 3.40% 2006| 4.93%| 3.20% 2007| 4.87%| 2.80% 2008| 3.75%| 3.80%

 

[ziggy29]

For anyone with more than 5 years left until retirement, the G fund is the worst place in TSP for your money.

I suspect some people who loaded up on the C fund instead of the G fund 10 years ago and held on might beg to differ.

 

[stoutboy]

I suspect some people who loaded up on the C fund instead of the G fund 10 years ago and held on might beg to differ.

which just shows why most people are financial illiterates. A long-term view to investing takes into account market swings. Historically, and for the periods of time I'm talking about, the C fund has greatly outperformed the G fund.

Of course, the closer to retirement one is, the more one should move more of their assets out of equities.

 

[yakers]

I really think the G Fund is a great combination in an overall portfolio. You can hold a higher % of stocks because it is a risk reducer. My question is how much F (bond) fund to hold. Recently I shifted from a Lifecycle fund to a combination of C, S, I & G as I expect bonds to take a beating for some period. Even 10 years away from retirement it is a , IMHO, A good idea to have some fixed income whether it is F, G, REITs, TIPs, ibonds or whatever.