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Options for Distributing Thrift Savings Plan (TSP) Funds After Separation from Federal Service

What happens to my Thrift Savings Plan (TSP) after I separate from federal service? FinEd for Feds is dedicated to providing financial planning education that is relevant for U.S. Federal Government Employees. Federal Employee benefits are complicated yet extremely valuable. Our goal is to make your benefits easier to understand and explain how they integrate with other aspects of your financial life. Ultimately, we want you to be educated during your working years and to feel confident and empowered to retire comfortably from federal service. Discovery Wealth Planning LLC is a Registered Investment Advisor. We are fee-only, which means we do not sell products for a commission. We are also a fiduciary and we put client interests first 100% of the time. We offer one-time and ongoing financial planning engagements with a CERTIFIED FINANCIAL PLANNER™ for U.S. Feds. To learn more, please visit This channel is purely educational and should not be considered as financial, legal or tax advice. Discovery Wealth Planning LLC (“DWP”) is a registered investment advisor offering advisory services in Virginia, Maryland and Washington, D.C. and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. This communication is for informational purposes only and is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering. This communication should not be relied upon as the sole factor in an investment making decision. Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or complete loss of funds invested. It should not be assumed that any recommendations made will be profitable or equal the performance noted in this publication. The information herein is provided “AS IS” and without warranties of any kind either express or implied. To the fullest extent permissible pursuant to applicable laws, DWP disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose. All opinions and estimates constitute DWP’s judgement as of the date of this communication and are subject to change without notice. DWP does not warrant that the information will be free from error. The information should not be relied upon for purposes of transacting securities or other investments. Your use of the information is at your sole risk. Under no circumstances shall DWP be liable for any direct, indirect, special or consequential damages that result from the use of, or the inability to use, the information provided herein, even if DWP or a DWP authorized representative has been advised of the possibility of such damages. Information contained herein should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized. This site may contain endorsements by non-clients who are not users of our products and/or services. These endorsements reflect their own opinions or views and may not be representative of our own. We are not affiliated with users who provide endorsements and they are not paid or otherwise compensated directly or indirectly for them....(read more)
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Thrift Savings Plan (TSP) Distribution Options After Separation from Federal Service The Thrift Savings Plan (TSP) is a retirement savings and investment plan available to federal employees and members of the uniformed services. It provides a means for individuals to save for their retirement, offering various investment options and tax advantages. But what happens to your TSP account when you separate from federal service? This article aims to shed light on the distribution options available to TSP participants after separation. Upon separation from federal service, TSP participants have several choices regarding their TSP account. The first option is to leave the funds in the TSP. Unlike most retirement savings plans, the TSP allows former employees to keep their accounts open if the balance is above $200. By leaving the funds in the TSP, participants can continue to benefit from the investment options and low fees that the plan offers. However, no further contributions can be made to the TSP after separation. Another option for TSP participants after separation is to roll over their funds into an individual retirement account (IRA) or an employer-sponsored retirement plan. By performing a direct transfer, the funds can be moved from the TSP to another retirement account without incurring any taxes or penalties. Rolling over the funds into an IRA provides greater control and flexibility in investment choices, while rolling over into a new employer's plan may be more suitable for individuals who have secured new employment. If TSP participants choose not to leave their funds in the TSP or roll them over to another retirement account, they can also make a one-time partial withdrawal or a full withdrawal of their TSP balance. However, it's important to note that making a withdrawal will have tax implications. If participants withdraw funds before the age of 59 ½, they may be subject to a 10% early withdrawal penalty in addition to income taxes on the amount withdrawn. On the other hand, a full withdrawal from the TSP after the age of 59 ½ allows participants to avoid the penalty, but they will still be liable to pay income taxes on the amount withdrawn. For participants who plan to continue working after separation and are not in immediate need of the funds, but still want to diversify their investments, the TSP also provides an option called "in-service withdrawals". This allows participants to transfer a portion of their TSP account into an IRA or another eligible retirement account while still being employed. It's crucial for TSP participants to carefully consider their financial goals and consult with a financial advisor or tax professional before making any decisions regarding their TSP account after separation. Each option has its own advantages and disadvantages, and the best choice will depend on individual circumstances and long-term retirement plans. In conclusion, the TSP provides federal employees and members of the uniformed services with a valuable retirement savings tool. When separating from federal service, participants have several distribution options for their TSP account, including leaving the funds in the TSP, rolling them over to another retirement account, making a partial or full withdrawal, or opting for in-service withdrawals. It's vital to evaluate the tax implications and seek professional guidance to make an informed decision that aligns with long-term retirement goals. https://inflationprotection.org/options-for-distributing-thrift-savings-plan-tsp-funds-after-separation-from-federal-service/?feed_id=146448&_unique_id=652d8b4a89036 #Inflation #Retirement #GoldIRA #Wealth #Investing #cfpforfeds #federalemployeebenefits #federalretirement #federalretirementplanning #fersplanning #fersretirement #financialadvisorforfederalemployees #taxefficientspendinginretirement #thriftsavingsplan #thriftsavingsplanexplained #thriftsavingsplanfunds #thriftsavingsplanhelp #tspwithdrawals #withdrawalstrategiesforretirement #ThriftSavingsPlan #cfpforfeds #federalemployeebenefits #federalretirement #federalretirementplanning #fersplanning #fersretirement #financialadvisorforfederalemployees #taxefficientspendinginretirement #thriftsavingsplan #thriftsavingsplanexplained #thriftsavingsplanfunds #thriftsavingsplanhelp #tspwithdrawals #withdrawalstrategiesforretirement

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