TSP Rollover Guide

Understanding the Thrift Savings Plan

The Thrift Savings Plan (TSP) is a retirement savings plan for federal employees and members of the uniformed services. It offers low-cost investment options and tax advantages similar to private-sector 401(k) plans. When you leave federal service, you have several options for your TSP balance.

TSP Rollover Options

When separating from federal service, you can:

• Leave funds in TSP: You can keep your account open indefinitely if your balance exceeds $200.
• Roll over to an IRA: Transfer to a traditional or Roth IRA at any financial institution.
• Roll over to a new employer plan: Transfer to a 401(k), 403(b), or 457 plan if the new plan accepts rollovers.
• Take a distribution: Cash out some or all funds (subject to taxes and possible penalties).

TSP Advantages Worth Considering

Before rolling over, understand TSP’s benefits:

• Ultra-low fees: TSP expense ratios are among the lowest anywhere (0.055% in 2024). Most IRAs cost 5-10x more.
• G Fund safety: The Government Securities Investment Fund offers returns above inflation with zero principal risk—unavailable elsewhere.
• Lifecycle funds: Low-cost target-date funds that automatically rebalance.
• Loan provisions: TSP loans have favorable terms if you need access to funds.

How to Roll Over Your TSP

1. Open your receiving account: Establish an IRA or confirm your new employer plan accepts rollovers.
2. Request TSP withdrawal form: Download Form TSP-70 (full withdrawal) or TSP-77 (partial withdrawal) from tsp.gov.
3. Complete the form: Specify direct rollover to avoid mandatory withholding.
4. Include receiving account information: Account number and institution’s mailing address.
5. Submit and track: Mail the form and monitor your TSP account for processing.

Traditional vs. Roth TSP Considerations

If you have both traditional and Roth TSP balances, they must be rolled over separately. Traditional TSP goes to traditional IRA; Roth TSP goes to Roth IRA. Mixing them creates a taxable event. Track your Roth TSP contributions carefully—you’ll need this information for qualified distributions from the receiving Roth IRA.