Leave TSP funds in TSP or move to Edward Jones

[WyomingLife]

To me that is a sensible use of the TSP G Fund. But you may not have thought through how to access that "cash" in a tax efficient manner. If we spiral into a massive recession in the next few years you might well figure on pulling "cash" from the G Fund. That will work, but since that cash is coming from a tax deferred source all of it will be taxed as ordinary income. That may or may not matter, depending on your other sources of income that year and whether you have to take RMDs anyway. If you are high income, have a lot of equities in a taxable account, and would rather have your "cash" withdrawal taxed at capital gains rates, you can sort of achieve that by selling enough taxable equities to generate the cash you need and simultaneously buying the same amount of equities through an exchange from G to C in the TSP on the same day. This leaves you with cash on hand and no net change in your equities.

I am indebted to you; again, thank you. Great stuff.

 

[ExFlyBoy5]

I have a decent friend that is an EJs advisor. They spend a lot of time looking for clients and he told me once that older folks are great "marks" and you can find these folks by seeing "fat squirrels and long cars" in some older, established neighborhoods. Yes...they still solicit business DOOR TO DOOR.

Also, this is a picture from his Facebook. Do you want to help pay for an EJs advisors sweet ride?

 

[OldShooter]

That's really funny. In my Adult-Ed investment class we talk about the myths that the industry pushes, including the myth that stock picking works. I then have a slide that says:"Why do the myths survive?"

One more mouse click reveals: "The myths put the Porsches in the garage."

 

[ExFlyBoy5]

That's really funny. In my Adult-Ed investment class we talk about the myths that the industry pushes, including the myth that stock picking works. I then have a slide that says:"Why do the myths survive?"

One more mouse click reveals: "The myths put the Porsches in the garage."

I like it! Don't get me wrong, I am all about financial success, even if that means being able to buy a pretty nice car. However, I would prefer to *not* contribute *my* stash for someone else's said pretty nice car.

I would also note that while he was a pretty good buddy of mine during our Air Force days, once he went to w*rk for EJs, his incessant nagging about "seeing what he could do for me" really eroded our relationship. It was worse than these people who are suckered into a MLM scheme and try and sign you up for the "best deal ever!!!"

 

[mickeyd]

I agree with comments regarding keeping EJ's hands off of your stash. Leave it @ TSP or send it to VG to open an account. Both are low cost.

 

[OldShooter]

Funny EJ video - Very NSFW:

Much less NSFW, not specific to Fast Eddie, but good fun IMO:

(This video was created by Nobel Prize winner and Stanford professor Dr. William Sharpe.)​

 

[W2R]

I left the federal government in 2006 and left my funds in the TSP. I currently have all of my funds in the G fund. My other funds are at Vanguard.

+1

Exactly the same here, except I retired from the federal government in 2009. It works wonderfully for me. My G Fund is part of my bond allocation, and also I am taking equal monthly payments from it that will continue until I reach age 95.

 

[RetMD21]

If you do decide to roll any money to Fidelity or Vanguard or Schwab make sure to leave a balance in TSP.

I wish I had kept access to TSP. I rolled over to Vanguard in '91 when I changed jobs.

 

[stephenson]

There is zero need to stay with a company like EJ.

 

[Markola]

Well, I guess we answered THAT one with unanimity, LOL. Maybe a record. I hope the OP hasn’t left the party and missed out on our brilliant advice.*[emoji310]

 

[travelover]

Well, I guess we answered THAT one with unanimity, LOL. Maybe a record..........

Well, yea, but TeeRuh pointed out the biggest reason to stay.

Full disclosure: When I left EJ I stopped getting Christmas cards!

 

[deserat]

There is one disadvantage to leaving your funds in the TSP. They do not allow Roth conversions currently for your tax deferred portion of the portfolio. Therefore, if you want to do a any Roth conversion of your tax deferred portfolio, you will have to roll it out of the TSP and then do the conversion in another brokerage (VG/Schwab/Fidelity). If you are not concerned about Roth conversions, then TSP will assist you in making sure you take your RMDs (as well as pay the taxes on them).

 

[donheff]

There is one disadvantage to leaving your funds in the TSP. They do not allow Roth conversions currently for your tax deferred portion of the portfolio. Therefore, if you want to do a any Roth conversion of your tax deferred portfolio, you will have to roll it out of the TSP and then do the conversion in another brokerage (VG/Schwab/Fidelity). If you are not concerned about Roth conversions, then TSP will assist you in making sure you take your RMDs (as well as pay the taxes on them).

Same thing if you want to take top of the line deductions for qualified charitable distributions by check. Now that most of us take the standard deduction, QCDs can be handy. I rolled out a portion of my TSP to Schwab so I could start writing QCD qualifying checks to my regular list of charities.

 

[ChrisC]

There is one disadvantage to leaving your funds in the TSP. They do not allow Roth conversions currently for your tax deferred portion of the portfolio. Therefore, if you want to do a any Roth conversion of your tax deferred portfolio, you will have to roll it out of the TSP and then do the conversion in another brokerage (VG/Schwab/Fidelity). If you are not concerned about Roth conversions, then TSP will assist you in making sure you take your RMDs (as well as pay the taxes on them).

I'm not sure this is correct. My impression was that you could always transfer funds out of TSP (traditional tax deferred) to a Roth IRA and thus have a Roth conversion, under limited circumstances, prior to the most recent revisions to the withdrawal and transfer rules. The new rules make this easier and expand the frequency and levels of transfers, so that you have more flexibility in moving TSP account funds out of TSP for withdrawals, transfers or rollovers. Here is the literature on transfers and Roth conversions out of TSP: https://www.tsp.gov/publications/tsp-536.pdf

My plan is to transfer most of my 401k to TSP, beginning this year which is 6 years after I retired from Federal service, and begin Roth conversions out of TSP to my Roth IRA (with Wells Fargo Advisors) in 2021 until I reach 72 in 2025 (and perhaps go even beyond 2025 if tax circumstances dictate it). During the 6 years we've been retired, my wife will have completed conversting her entire tax deferred retirement accounts into a Roth IRA.

One major advantage we have in making conversions out of the TSP is that we pay no state income tax from these conversions in NC.

I don't think TSP permits conversions between TSP (tax deferred) and TSP Roth Accounts. If it did, I'd be looking at that as well.

 

[teejayevans]

Funny EJ video - Very NSFW:

No humor, a real call to EJ in an attempt to transfer IRA $.

https://youtu.be/bBRZS4y9sZc

 

[richardf]

How are Fidelity or Vanguard different from Edward Jones?

They have cheaper expenses, .9% vs .03, sometimes 0 for the same stuff.
VSTAX, or any total market fund. Your best bet is CDS or just spend it.

 

[plex]

Also have a substantial TSP account, certainly do not plan to ever leave it unless they neuter it heavily in the future. I don't have much more to add, but this title immediately struck me as jumping from one of the safest options possible, into one of the most unsafe options possible, quite an extreme move.

EJ does allow you more ability to have someone to talk to, and general handholding, but they generally are guiding you off a cliff, or at least a really steep hill. You have to educate yourself to even properly make use of EJ's services, and by that point, you are back to the TSP being the best option in nearly all the aspects that really matter for self-informed investing. If you aren't at all capable of any sort of asset management, there are certainly better options than EJ.

 

[RetMD21]

That EJ phone call is horrible. I just had my mother sign a transfer form with Vanguard and let them do it. The advisor told me that I should have made an appointment but I didn't let his opinion concern me.

Also the EJ advisor wants him to sell and take out cash probably so that he can get one more commission. My mother was paying >$200 for each trade.

 

[jazz4cash]

That EJ phone call is horrible. I just had my mother sign a transfer form with Vanguard and let them do it. The advisor told me that I should have made an appointment but I didn't let his opinion concern me.

Also the EJ advisor wants him to sell and take out cash probably so that he can get one more commission. My mother was paying >$200 for each trade.

Yeah the call exposed a dark side of EJ but the new “advisor” wasn’t much better. When I moved funds from a regional broker to Fido I didn’t have to go through that. A reputable advisor should be able to get a fax number or address without putting a client through all that stress.

 

[paul5795]

To me that is a sensible use of the TSP G Fund. But you may not have thought through how to access that "cash" in a tax efficient manner. If we spiral into a massive recession in the next few years you might well figure on pulling "cash" from the G Fund. That will work, but since that cash is coming from a tax deferred source all of it will be taxed as ordinary income. That may or may not matter, depending on your other sources of income that year and whether you have to take RMDs anyway. If you are high income, have a lot of equities in a taxable account, and would rather have your "cash" withdrawal taxed at capital gains rates, you can sort of achieve that by selling enough taxable equities to generate the cash you need and simultaneously buying the same amount of equities through an exchange from G to C in the TSP on the same day. This leaves you with cash on hand and no net change in your equities.

+100

This is absolutely the way to use the TSP. My wife and I have had our TSP accounts entirely invested in the G Fund for more than 20 years and our equity investments outside the TSP. As Don pointed out, the G Fund has long term Treasury yields with no risk, not even interest rate risk because of the overnight repricing. If we were to need cash, we would sell our equities outside our TSP and move a corresponding portion of our G Fund into the C Fund. Brilliant advice.

 

[The HalfBreed]

Edward Jones is about making money. YOUR Money and taking it for themselves via High annual fees and more.



RUN !



I'm in the TSP, retired in 2012, and kept the majority of my funds there, but I DO have 2 Mutual Funds with Vanguard and 1 with Dodge & Cox (I'll sell that when the time comes).

You can't go wrong with Vanguard or Fidelity. Both are excellent.
WITH lower fees for sure.

 

[Chuckanut]

Hello

I have retired from fed gov. I have a TSP (Thrift Savings account). I also have an Edward Jones account. My financial advisor is trying to talk me into moving my TSP funds into Edward Jones. It would be nice to have everything in one place and I do not have financial knowledge so my TSP is just sitting there. I do know it is cheaper to leave my funds in TSP.

Any thoughts.

Thanks

Educate yourself about the basics of investing. It’s not rocket science. 40 hours of reading at most. Over a decade or two it will be like earning at least $1000 an hour for the time spent. And you won’t feel like a fool.

 

[HawkOwl]

Just be aware that in order to withdrawal from TSP, a notarized concurrence from your spouse is required.

 

[GravitySucks]

We being trolled here?

 

[donheff]

Just be aware that in order to withdrawal from TSP, a notarized concurrence from your spouse is required.

i recently rolled a portion of my TSP account to Schwab so I can do QCDs. I didn’t have to do this.