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Four options for your Thrift Savings Plan (TSP)

What can you do with your TSP account when you retire?

There are two major tax advantages to the Thrift Savings Plan (TSP). First, you pay current federal income taxes on your salary after your TSP contribu­tions have been deducted. Second, you do not pay current federal income taxes on the earnings you receive on your TSP account balance.

So what are your options when deciding what to do with your account at retirement? Here are four:

  1. Leave the assets in your TSP account – You have limited investment options and cannot contribute after retirement. However, leaving your funds in a TSP account limits your options for legacy planning.

  2. Roll your TSP account assets into an IRA – Two advantages of rolling your TSP into an IRA are maintaining certain tax advantages and having complete control over your investment options.

  3. Withdraw your TSP account assets in a lump sum – This could potentially jump you into higher tax brackets,* plus if you’re younger than 59 ½, Uncle Sam will hit you with an extra 10% early withdrawal penalty.

  4. Transfer your TSP account assets to a qualified annuity – An annuity is similar to a “personal” pension and creates an income stream for life. Retirement plans such as the TSP, IRAs, and 401(k)s are limited to the amount of money you are able to invest and you can outlive them. Plus, your heirs may be able to inherit a portion of your annuity if you pass away during the accumulation phase.

As your local Federal Employee Benefits specialist, Marc Rosenblum can provide you with a personalized Federal Benefit Analysis. This complimentary report will calculate your TSP benefit amount as part of your complete retirement plan.

Call us at (215) 672-7676 to schedule an appointment – there is no cost to meet with me or for this report, so call today!

* Consult your tax professional.