(This article originally appeared in the July 2025 issue of Military Officer, a magazine available to all MOAA Premium and Life members, who can log in to access our digital version and archive. Basic members can save on a membership upgrade and access the magazine.)

If you served in the military any time after Oct. 1, 2001, you had the opportunity to contribute to the Thrift Savings Plan (TSP). Once you leave military service, you have some options about what to do with your TSP during the time before you turn 59½ years old and are eligible to take regular distributions.

There are several options, and the right choice will be different for each person’s situation.

Your first option is also the simplest: Leave your funds in TSP. This could be a good choice if you can’t decide what to do. TSP has very low fees, and the five funds meet the needs of most investors.

There’s even an option, albeit an expensive one, to invest in other products within TSP, but it might not be the right tool for that job.

[MORE ON YOUR PLAN: TSP.gov]

The second option is to roll your TSP balance into another qualified account. This can include an employer-sponsored 401(k), 403(b), or 457 plan, or an individual retirement account (IRA).

Why consider this option? Perhaps the other account has lower fees, or it has different investment options, and it might allow you to convert traditional funds into Roth funds (with a tax cost, of course).

You can also take money out of your account without rolling it into a qualified account. This would be a distribution from the account. Depending on your age, exceptions to policy, and the type of TSP account (traditional or Roth), you might owe income taxes and/or an early withdrawal penalty. These taxes and the penalty can range from 0% to 40% (and sometimes more), depending on the specifics of your situation. Make sure you thoroughly understand the tax consequences before taking this step.

[RELATED: The Basics on Finding Professional Planning Help]

If your TSP account remains open, you can also roll qualified funds into TSP. To keep TSP open, your account balance must not fall below $200. So if you want to keep it open to preserve options, you might want to keep several hundred more dollars in TSP even if you move most of your funds elsewhere. This will give you a buffer during market swings.

Funds that can be rolled into TSP include 401(k), 403(b), and 457 plans of either traditional or Roth tax treatment, or traditional IRAs including SIMPLE IRAs (otherwise known as Savings Incentive Match PLan for Employees). There is no provision to roll money from a Roth IRA into TSP.

[RELATED: 5 Money Moves to Make When Interest Rates Are Falling]

In any situation, it’s vital you keep your contact information and beneficiary designations up to date throughout your retirement. Without an accurate email address, telephone number, and physical address, you might miss out on vital communications. It’ll also be much more difficult to reset your password if you get locked out.

Check beneficiary designations yearly and when you have a major life event such as a marriage, birth, death, or divorce.

TSP might be an important part of your retirement plan. Knowing your options is the first step in figuring out how to use these funds in the best way
for your unique situation.