The Scoop on the Thrift Savings Plan

The Scoop on the Thrift Savings Plan
Photo by MC3 Charles Oki / Navy

Here's some news for those of you who kept your Thrift Savings Plan (TSP) after leaving service: You can transfer retirement plans outside your TSP into your TSP. You can transfer your traditional IRAs or your employer Roth or traditional qualified plans such as 401(k)s, 403(b)s, 457s, etc., as long as you have an existing TSP account.

If you don't already have a Roth balance in your existing TSP, the transfer of an employer's Roth account will create one. Note: Roth IRAs aren't eligible for transfer.

[RELATED: Download MOAA's Financial Planning Guide (Members Only)]

Some more transfer facts to keep in mind:

  • A “transfer” is not a taxable event (I'm not talking about “rollovers”).
  • There's no penalty to transfer between accounts.
  • Transfers aren't “contributions,” so there's no limit on the amount of the transfer.
  • There's no income limitation.
  • The transfer doesn't count against your annual contribution limits.

This could be an attractive situation if you prefer the TSP platform and its extremely low costs.

When you change jobs, you'll need a place to consolidate your retirement assets. You won't want to leave your retirement funds with past employers, who regularly make changes to their retirement plans.

When your money is out of sight and mind, you could:

  • end up at another financial firm if your former employer changes plans,
  • end up in a default fund if fund choices change, or
  • pay much higher costs than those associated with the TSP.

About the Author

Lt. Col. Shane Ostrom, USAF (Ret), CFP®
Lt. Col. Shane Ostrom, USAF (Ret), CFP®

Ostrom retired from the Air Force in 2000 and joined the MOAA team in 2006. His responsibilities include researching and answering member inquiries regarding military benefits, health care, survivor issues, and financial concerns.