Should You Leave Your Money In TSP After Retirement?

Is TSP a good retirement plan?

Many even consider it the best 401k plan.

When it comes to employer-backed 401k plans, most experts say the TSP, with its 5% match and super-low administrative fees, is the best deal around.

At the end of May 2019 the TSP had 5,666,894 participants..

What is a good percentage for TSP?

5%You need your TSP! With few exceptions (like deep debt or abject poverty), no one should be contributing less than 5% of their salary to the Thrift Savings Plan.

Can you take money out of your TSP before retirement?

If you are 591/2 or older, you can make withdrawals from your TSP account while you are still employed. This is called an “age-based withdrawal” or “591/2 withdrawal.” You must pay income tax on the taxable portion of your withdrawal unless you transfer or roll it over to an IRA or other eligible employer plan.

Is TSP better than 401k?

The TSP offers both a traditional option and a Roth option, as do many 401k and 403b plans. Contributions to the traditional option are taxed deferred and reduce your taxable salary, but any future withdrawals are treated as taxable income. … Limits on TSP contributions are equivalent to those for 401(k) plans.

How many TSP millionaires are there?

45,200 TSP millionairesCurrently there are just above 45,200 TSP millionaires—out of some 5.8 million accounts, including current and retired federal and military personnel and survivors—up by 18,000 from the end of March but not yet back to the 49,600 at year-end 2019.

Should I roll my TSP into an IRA?

Another reason to consider a rollover is because of withdrawal options. One of the biggest downsides to the TSP is that it limits how you can take money out in retirement. … You may decide to roll over some assets for a specific reason, leaving the rest with the TSP.

How much tax do you pay on TSP withdrawal?

We’ll withhold 10% on the taxable portion of your withdrawal for federal income tax. You have the option of increasing or waiving this withholding.

At what age can you withdraw from TSP without penalty?

55With the TSP, you are exempt from the early withdrawal penalty if you separate from federal service in the year in which you reach age 55 or later. For IRAs, the early withdrawal penalty will apply on anything you take out up until you reach the age of 59 ½.

Does TSP withdrawal affect Social Security?

Most federal employees and their spouses will face Social Security taxation. … In effect, the withdrawal from the TSP triggers two taxes—the tax on the TSP dollar and a tax on your Social Security that you wouldn’t have had to pay otherwise.

How do I avoid paying taxes on my TSP withdrawal?

If you want to avoid paying taxes on the money in your TSP account for as long as possible, do not to take any withdrawals until the IRS requires you to do so….Full Withdrawalsa 50% survivor benefit,level payments, and.the no cash refund feature.

What states do not tax TSP withdrawals?

Alabama, Arkansas, Connecticut, Hawaii, Idaho, Illinois, Kansas, Louisiana, Maine, Massachusetts, Missouri, New Jersey, North Dakota, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, West Virginia and Wisconsin either don’t tax military retirement income or allow part or all of military retirement income to be …

Why is TSP bad?

The TSP is possibly the most inefficient account to use for a down payment and to pay for college. Savings in an individual account or a Roth IRA would be much better for the down payment as well as paying for college. A 529 plan would also work well to pay for college.

Can I transfer my TSP to a 401k?

General Rules. Broadly speaking, TSP accounts are subject to the same rollover rules and provisions that govern other tax-deferred retirement plans, including traditional IRAs and 401k plans. If you have an old TSP balance and you are now covered under a new employer’s 401k, you can generally roll the balance over.

How do I get my money out of TSP?

Requesting a withdrawal To request a withdrawal, log into My Account and click on the “Withdrawals and Changes to Installment Payments” link on the menu. From there you’ll have access to an online tool with which to start your withdrawal.

What are the worst states for retirement?

Here, in ascending order, are WalletHub’s top 10 worst states to retire to in 2020.Rhode Island.New Jersey. … West Virginia. … Tennessee. … Arkansas. … Mississippi. … New York. You can tour the Big Apple without retiring to the Empire State. … Louisiana. Come to Louisiana for Mardi Gras, jazz and Cajun cuisine, but not to retire there. … More items…•

What happens to TSP at retirement?

The money is taken out of your TSP retirement account, and the withdrawals will continue as long as your money lasts. If you choose this option, TSP will place an order to sell however many shares are required to provide you with your monthly withdrawal.

How long can I leave my money in TSP?

If you decide to leave your money in the TSP, you will be required to start withdrawing your money by April 1 of the year following either: The year you turn age 70½, if you are separated from Federal employment or the uniformed services, or.

Is TSP withdrawal considered income?

Withdrawals from your Traditional TSP are fully taxable as ordinary income when they are withdrawn; they do not receive any favorable tax treatment like a long term capital gain or a qualified dividend. There are, however, significant differences in how much is withheld from your TSP payments for federal income tax.

What is the best state to retire in for taxes?

The best states for retirement taxes include Wyoming, Nevada, Florida – Business Insider.

What is the average TSP balance at retirement?

Re: Average TSP Balance at Retirement 30, the average account balance of an employee covered by the Federal Employees Retirement System was $56,494.

Should you max out TSP?

The Thrift Savings Plan (TSP) is a great tool for federal employees to save for retirement. Saving, and even maxing out your contributions to TSP is normally thought of as a good thing. Yes, maxing out your TSP can be very beneficial, but may not be the best thing for your financial future.