If you’re a federal employee approaching retirement, you’ve probably asked yourself: what do I actually do with my TSP once I stop contributing? In this video, Ben Raikes, CFP®, EA, of Mason & Associates walks through the four main paths available to you, the tax implications of each, and why the “right” answer usually isn’t just one option.
Ben covers leaving your money in TSP, rolling it into a new employer’s 401(k) or 403(b), cashing out (and why that’s rarely a good idea), and rolling into an IRA. He also explains why Mason and Associates typically takes an “all of the above” approach rather than fully closing out a client’s TSP.
A few additions worth noting: If you choose to leave your money in TSP, you actually have a few ways to access it, including taking as-needed distributions, starting a monthly systematic distribution, or purchasing a TSP annuity. Also worth noting: TSP withholding is not always a flat 20%. Eligible rollover distributions paid directly to you generally require 20% federal withholding, while certain periodic payments use IRS withholding tables.
Direct rollovers to another retirement account generally avoid mandatory withholding. You can read more on TSP’s official withholding guidance here: https://www.tsp.gov/publications/tspbk26.pdf
Timestamps:
0:00 – Intro: TSP options at retirement, and leaving it in TSP
0:46 – Rolling into a new employer’s 401(k) or 403(b), and cashing out your TSP
1:22 – Tax implications of cashing out (why we don’t recommend it)
1:57 – Rolling into an IRA 2:44 – What to look for in an advisor if you roll over
3:29 – Why TSP is great for accumulation, not always for distribution
4:13 – Why we rarely close out a TSP completely
4:54 – Get in touch
Resources: 📅 Schedule a consultation: https://www.masonllc.net/get-started
📘 Free Guide: Federal Employee’s Guide to Survivor Benefits: https://www.masonllc.net/federal-employee-guide-to-survivor-benefits/
🎙️ Listen to the Federal Employee Financial Planning Podcast:
https://podcasts.apple.com/us/podcast/federal-employee-financial-planning-podcast/id1605491625 https://open.spotify.com/show/5On2XdW3WxRx7BClAIUfcL
📧 Newsletter signup: https://www.masonllc.net
About Mason and Associates: Mason and Associates is a fee-only financial planning firm specializing in federal employee retirement benefits, including FERS, TSP, FEHB, survivor benefits, Social Security, and tax planning. Recognized on the Inc. 5000 list, our team of CFP®, CPA, and EA professionals has helped thousands of federal employees plan for retirement.
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Website: https://www.masonllc.net
Disclaimer: Investment advisory services offered through Mason and Associates, LLC. The content of this video is for general educational and informational purposes only and should not be considered specific investment, financial planning, tax planning, legal, or other professional advice.
